Lauren McKinley

The collateral coverage ratio (CCR) is a calculation that compares the discounted collateral value (DCV) with the total loan amount to ensure proper coverage. It is calculated by dividing the DCV provided by the amount borrowed. It can be used by lenders to evaluate the maximum loan limit eligibility of a borrower, and most lenders…

For businesses without the resources to fulfill orders, PO financing can help avoid turning away customers or processing delays if you have insufficient funds or limited stock. Take note that it requires that you sell finished goods to either a business (B2B) or the government (B2G). The process is simple—the financing company reviews the order,…

The quick ratio, also known as the acid-test ratio, calculates a company’s ability to cover its current liabilities by means of its current assets. It is a liquidity ratio used by a company’s stakeholders, investors, and lenders and takes a company’s quick assets—which are current assets minus inventory and long-term receivables—and divides them by current…

Net working capital (NWC) is used to determine the financial health of a business by calculating the difference between a company’s current assets and current liabilities. You can use NWC to evaluate a company’s financial trends, growth projections, and solvency. You can use our calculator below to determine your company’s NWC. If you’re looking to…

504 loans offered through the Small Business Administration (SBA) are designed to provide funding for fixed assets that help in the creation of jobs or business growth. Some examples of allowable uses include the purchase or construction of land, buildings, machinery, and other equipment. An SBA 504 loan has two separate funding sources: Certified Development…

The capitalization rate, or cap rate, is often used by real estate investors to determine the potential rate of return from a property. It can be a useful valuation tool when comparing investment properties and can be used to figure out if a property will yield enough of a profit. However, it does have its…

The best SBA funded franchises are those that have a low default rate and a high chance of approval from the Small Business Administration (SBA). We’ve compiled data representing the top SBA funded franchises in one table and the franchises with the highest default rate from FY2020 to FY2023 in another. Top 20 SBA Funded…

The main difference between purchase order financing vs factoring lies in when they’re used. PO financing is utilized when you need funding to pay for materials or services to produce tangible goods that have not yet been delivered to your customer. Invoice factoring is used when you have already delivered and completed a customer order but have…

Unsecured business loans for startups can help businesses bridge the gap between business needs and capital resources. We’ve outlined the applicable steps on how to get an unsecured startup business loan to help prepare you—from evaluating the type of loan you need and choosing a lender, to submitting your application and accepting the loan agreement….

A convertible note is a short-term financial document that allows a business to receive cash in exchange for equity in a company. This agreement is utilized by startups to receive support from angel investors, venture capitalists, or other types of private investors. Investors provide funding with the assumption that those funds will be repaid or…

A current liability is any financial obligation that has an amount due within the next 12 months. It can be found on your company’s balance sheet and can include loan payments, payroll expenses, and accounts payable (A/P). It’s an important figure to know because it will help ensure that you have enough assets to satisfy…

The 5 C’s are used by lenders to evaluate potential risk when determining a borrower’s creditworthiness and ability to repay a loan. Each lender has their methods of valuing each category and uses their judgment during the approval process before extending financing. The 5 C’s of credit are as follows: Character: This demonstrates your reliability…