Guidant Financial Group Blog

In today's economic climate, some may be afraid to open a business, but really now is the perfect time!

If you missed our free webinar hosted by David Nilssen last Friday, on the topic Avoiding Common Credit Mistakes, you can now access it here.

It really shouldn't shock anyone but we decided to write about it anyway because there was a great point made...and then missed.

In the article, the CEO of FranChoice, Jeff Elgin partially blames the credit crisis. He said that is because many aspiring franchisees "who nine months ago would have gotten financing very easily are being held up." Well, that is true. What was missed in the story is that although there has been a decline in SBA and other lending products - there has been a significant increase 401(k) Small Business Financing vehicles. More and more individuals are seeing the value of investing in a business that they control and increase value in.

Guidant Financial Group is the only Inc. 500 business that allows individuals to invest their retirement funds into a business without paying taxes or penalties. Many of these clients are buying these businesses in cash (from the retirement plan) so that initial cash generated can go back into the business as apposed to being sent to a bank in the form of an interest payment! In Q1 2009, Guidant announced nearly 30% growth in it's business from 2007 to 2008.

We are excited to announce that Guidant has added more services to its small business and franchise financing business unit.

Introducing: Unsecured Credit for Start-Up (and Existing) Businesses

The programs allows us to obtain up to $150,000 for small business or franchise start-up capital. The initial rates will range 0-8% and the amortization will range between 10-20yrs with NO penalty early pay-off. In my opinion, this makes our program even more attractive than the SBA when it comes to debt financing. The financing will be taken out in the name of the new business so that it doesn’t show up on your personal income statement/balance sheet. It makes it a great funding option for down-payments and so on! The type of financing is based on the individuals personal financials but is primarily credit driven.

WHO QUALIFIES?

• Have a credit score (FICO) of 700or higher.
• Have their average credit utilization under 50%.
• Home ownership is a plus – but not required.

In addition, the more household income you have, the better.

It is essential to understand that this program is a process. Just as you cannot develop an 800 credit score overnight, a business’s credit must also be “developed”. With a strategic plan it is possible to obtain an 80 Paydex (800 FICO equivalent) credit rating for your company within just one year. But waiting a year to get working capital just isn’t practical. We address this immediate need with working capital credit lines and use the business owner’s credit to jump start the process. The goal of the program is to meet your funding needs today and help you prepare for the future. The path to these results can only be achieved by following a systematic, planned design. That process is summarized as follows:

Week 1: Credit Analysis – our team provides a comprehensive review of your credit file in order to qualify whether or not we can provide a guarantee. We also determine if there is any “window dressing” that would enhance the appeal to commercial bank underwriters. Our credit analysis ensures that our clients will get the most approvals at the highest limits with the best terms possible.

Weeks 2-3: Initial Applications – our applications result in lines that DO NOT APPEAR on your personal credit. Many lines are at 0% for the first year, allowing for a revenue ramp up period from the new capital investment(s). The applications are stated income and your business is not required to furnish financials for the applicants.

Week 4: Bank and Supply Lines Applications – bank line applications are submitted after the initial applications. These are reserved for businesses that have been operating for at least 6 months. New start-ups will have bank line applications submitted 6 months from business card applications. Most supply lines are not personally guaranteed, therefore these accounts report much more aggressively to business credit reporting agencies. Vendor accounts are actually more important in developing the company’s credit rating.

The initial capital should be funded by this time assuming the client is working with our lending partners in a timely fashion. As part of their original consulting agreement with us, the program will continue as follows to enable the franchisee to establish business credit that is substantial enough to get “take-out” financing 12-18 months down the road:

Weeks 3 – 24: Credit Liquidation and Utilization Consultation – our lenders consult with client on how to strategically liquidate credit lines to minimize fees and interest. Our target is to find capital at 0% for 12-15 months. We will consult client on how to strategically utilize cash and supply lines in order to maximize business credit rating and minimize interest while systematically requesting credit line increases. The goal is to double the limits within one year.

Weeks 5 -24: Dunn and Bradstreet DUNS number application / Paydex acquisition - an application for a DUNS number is filed with Dunn and Bradstreet. With the appropriate combination of trade lines and seasoning of the business credit profile the scoring models can then assign a rating. If this program was followed faithfully and payments made on accounts as agreed a Paydex score of 80 or higher can be achieved within 6-12 months. Once the 80 Paydex score is obtained your business will be offered additional unsolicited, PREAPPROVED credit offers.

This is the ultimate goal: continuous credit offers made by banks on the best terms. The business will no longer need to seek credit…. banks will find them!

The fee that our company will require for our services allows us to impart our knowledge and insulate your business from potential pitfalls. The cost of errors in credit development can be disastrous and when time is money - very expensive. Guidant’s team eliminates all of the guess work and presents a winning strategy in the mysterious world of business credit development. In addition, we believe this will help fill the void left by the SBA in funding deals under $150,000!