Bank Credit

Understanding Bank Credit & Bank Ratings

Bank credit refers to the total borrowing capacity a business can secure from banks. To determine a company’s creditworthiness, banks use an internal bank rating system that evaluates financial strength from their perspective.

How to Build Strong Bank Credit

A business can quickly increase its access to bank credit by maintaining at least one strong bank reference and keeping a consistent average daily balance of at least $10,000 for three consecutive months.

Lenders primarily look for this $10,000 average balance, which qualifies a business for a Low-5 Bank Rating—a critical factor in securing bank financing.

Bank Rating Scale & Account Balance Requirements

Here’s how banks classify business account balances:

• High 5: $70,000 – $99,999
• Mid 5: $40,000 – $69,999
• Low 5: $10,000 – $39,999 (Ideal for bank financing approval)
• High 4: $7,000 – $9,999 (May struggle with approval)
• Mid 4: $4,000 – $6,999
• Low 4: $1,000 – $3,999

Businesses with an average balance below $10,000 may find it more difficult to qualify for traditional bank financing.

Key Takeaways

To maximize your bank rating and increase financing approval odds:

• Maintain a consistent daily balance of at least $10,000
• Establish and nurture a strong bank relationship
• Avoid significant fluctuations in account balances

Following these steps ensures your business maintains a strong financial reputation with banks, leading to better funding opportunities and higher credit limits.