How much credit line can a company with an A1 Dun and Bradstreet rating qualify for?
Dax asked:
I have seen a “seasoned company” for sale that has an A1 Dun and Bradstreet rating. How much credit line and what type of terms usually can a company with this credit rating qualify for? The seller states that it could probably qualify for 1mm with an A1 rating.
I have seen a “seasoned company” for sale that has an A1 Dun and Bradstreet rating. How much credit line and what type of terms usually can a company with this credit rating qualify for? The seller states that it could probably qualify for 1mm with an A1 rating.
The rating is a factor, but there are many other factors such as assets, liabilities (including the aging of the AR/AP). You can get an appraiser to value your in/tangible assets. But the biggest factors are cash flow, EBITDA margins, and total revenue. Assuming your business is doing 1MM in EBITDA on 20MM revenue, you can secure for maybe 2.5 times that amount. It all depends on the dynamics. Also, if working capital is a crucial need, you can hire an investment bank to find you a mezanine lender that specializes in those deals. They usually give higher multiples on working cap if your business is on the up and up. Good luck.