Lending Criteria at a Glance

August 2021

Over the course of the past few years, I have written on many subjects such as commercial lending, tax notes, credit information and more. This month I am reprinting below Frequently Asked Questions that are taken from the Joslen Commercial Funding, LLC brochure. They are short answers to very common questions.

More information can be found on joslencommercialfunding.com and as always, please call for any help, advice or questions that you might have.

What is Section 179 and will it save me money?

The section 179 tax deduction has been extended for 2021. This tax bill allows for a full deduction of equipment up to $1,000,000 which makes it advantageous to purchase new or used equipment for your business. Have your Accountant or CPA use form 4562.

How important is good credit to qualify for financing?

Good credit is obviously an important piece to qualifying for a loan, but is only one of the many factor’s lenders will look at. Approval, as well as rates for a loan or lease, will be determined by time in business, home-owner or not, type of business, how many guarantors on the loan, history of like-size loans in the past, etc.

What is an EFA?

An Equipment Finance Agreement is a very popular financing option. Although it works “like a lease” it is technically not a lease. With an EFA the borrower owns the property and it is secured by a UCC filing or a title. This means that only the equipment is the collateral versus an installment loan that can have a blanket lien on all of your business assets. There are numerous other benefits of an EFA as well.

What is a Collateral Loan?

A Collateral loan is when other lien-free equipment is used as collateral to secure the new financing. Typically a lender will want a 2:1 ratio which means if $30,000 was desired to purchase a piece of equipment an additional $30,000 in equipment would need to be put up as collateral. This type of financing is often used when credit challenges exist.

What is a soft credit pull?

All potential lenders will do a credit check on a potential borrower but some lenders will only do a “soft” pull. This is when public data is pulled but not through a credit agency. Some lenders feel this is an adequate amount of information to determine if a loan should be approved. The advantage for the borrower is that it does not count as in inquiry on your credit report and thus lower your personal credit score.

How can Joslen Commercial Funding help me?

Joslen Commercial Funding offers the expertise that you need in determining what type of financing is best for you. We work with most of the Nation’s top lending institutions so after an application is processed and evaluated, our staff will determine where your best interests will be met. We work with all types of borrowers no matter what their business or credit experience is. We pride ourselves in the ability to place loans where our competitors just can’t. We also understand that your credit score is important to you so we take every precaution that lenders are not affecting your score by running unnecessary reports. We are always your advocate in every way. Our membership in the American Association of Commercial Financial Brokers (AACFB) shows our commitment to always be current on issues that could affect your bottom line.

Does a Bankruptcy disqualify me?

If a bankruptcy is not “discharged” then credit will not be available. After discharge different lenders will consider offering loans after 2-5 years. A significant parameter will be how much credit has been established since the bankruptcy.

Until next month,


Famous Quotes

"Let us permit nature to have her way. She understands her business better than we do."

Michel de Montaigne

Did You Know???

Facts About Chickens

  1. A healthy chicken lays about 265 eggs each year.
  2. Chickens cluck after they lay an egg.
  3. Chickens have excellent hearing and memory.
  4. There are well over 300 breeds of chickens.
  5. Chickens eat almost anything – grass, bugs, fruit, vegetables, and table scraps.
  6. Chickens are raised mostly for their eggs and meat, but ultimately, all about chickens also make good pets.

Just for Laughs!

An elderly man is on his death bed and knows the end is near. His nurse, his wife, his daughter and 2 sons are with him. He asks for two witnesses to be present and a camcorder be in place to record his last wishes, and when all is ready he begins to speak:

"My son, Bernie, I want you to take the Mayfair houses.

"My daughter, Sybil, you take the apartments over on the east end.

"My son, Jamie, I want you to take the offices over in the City Centre.

"And, Sarah, my dear wife, please take all the residential buildings on the banks of the river."

The nurse and witnesses are blown away as they did not realize his extensive holdings, and as he slips away, the nurse takes his wife's hand and quietly says, "Madam, your husband must have been such a hard-working man to have accumulated all this property."

The wife replies, "Property?...he had a paper route!"

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