Apple Capital Group Credit Policy
Apple Capital Group Credit PolicyCredit Underwriting Guidelines and Minimum Standards
For Apple Capital Group Credit Policy
Effective October 1, 2016
Apple Capital Group Credit Policy underwrites Application Only transactions between $5,000 and $50,000 using a combination of scoring and business rules to determine anapplicant’s eligibility for approval and assigns appropriate pricing. The automatic scoring process is known as QuickScore. QuickScore provides guidance as to qualified candidates but is not to be used as an indicator of a business, guarantor or vendor’s validity or the reasonableness of a transaction. Using QuickScore
requires that standard underwriting practices, good common sense business practices and full disclosure are used to make final decisions as to the quality of
a lease application.
Credit Approvals are valid for 60 days from the original approval date. An extension may be granted when updated credit information is submitted for
review.
Personal Guarantees
The personal guaranty of any individual with 25% or greater ownership interest is required. In situations where there are more than two (2) guarantors, we will
evaluate the guarantors as follows:
• Equal Ownership of guarantors: The “best” two will be scored. If ANY of the guarantors fall below our minimum standards, a manual review and approval by a Credit
Manager will be required.
• Unequal ownership of guarantors: The two guarantors totaling the highest % of ownership will be scored. If ANY of the guarantors fall below our minimum standards, a manual review and approval by a Credit Manager will be required.
• Married guarantors: In the case where we have a husband and wife with the same credit, any exceptions will be counted only once for common accounts and
characteristics. Separate exceptions will be noted on separate accounts and characteristics.
Minimum Credit Bureau Characteristics
Delinquency Scores:“Beacon” or “FICO” score of 680 or greater of at least one individual with no additional individual scores less than 650. If a financial statement package is supplied, the minimum bureau for all guarantors is 650.
Time in bureau: 5 years minimum
Reporting Lines: Each guarantor should have a minimum of 5 active lines
Percent of Revolving Availability: 35% including HELOC Revolving balances should not exceed $50,000 excluding HELOC
Home Ownership: Proof of home ownership is required for all transactions. If there is more than one guarantor, this requirement can be satisfied by the guarantor with majority ownership or, if ownership is equal, by one guarantor. Proof of home ownership can be supplied in lieu of reported mortgage. Exceptions may be made and will
be considered on a case by case basis.
- Acceptable Forms of Documentation for Proof of Home Ownership:
Copy of Most Recent Property Tax Bill
Copy of Most Recent Mortgage Statement
Copy of current homeowners’ insurance policy or binder with current Financial
Institution listed.
H/E LOC reported on credit report
Property Ownership Report
Accurint, Real Quest or other Public Record Data Source
PayNet: Apple Capital Group uses Paynet, when available, to help determine the quality of a transaction. We require a minimum Paynet Masterscore of 660 or greater.
If no Paynet Masterscore is available we will require a minimum of one Comparable Term Borrowing trade reference of 80% of the lease amount requested with a minimum 12 month pay history.
Prior Bankruptcy: Apple Capital Group will not approve any company or guarantor with a prior bankruptcy.
Equifax Commercial Credit Report
Equifax Commercial Credit Report – A Public Records search is performed for all transactions. This search via Equifax ePort will list public records including
bankruptcies, judgments and liens as well as Secretary of State Listings. If any open liens or judgments are found, review for final approval is required.
Time in Business & Business Ownership:
Companies in business three (3) and Fours (4) years can qualify for Application Only up to $25,000. Over $25,000 will require the most recent year end Corp tax
return and a current interim financial statement.
Five (5) years minimum time in business is required up to $50,000 Application Only. Over $50,000 will require the most recent year end Corp tax return and a
current interim financial statement
Business must be a full time endeavor; “hobby” businesses are not acceptable. Confirmation of Time in Business under current ownership is required at
funding and can be provided by many methods that clearly establish the starting date or age of the business. (D&B is not typically acceptable)
Acceptable Forms of Documentation for proof of TIB:
Sole Prop Filed Business License
Copy of 1040 Schedule C
C-Corp Copy of 2nd Page of tax form 1120
S-Corp Copy of K-1’s
LLC Copy of K-1’s
Partnership Copy of K-1’s
Combination of a bank rating and at least one reputable finance company rating
PayNet (reported SOS data, Years in Business or Oldest Contract date)
D&B (SOS data, UCC filings in the same company name)
Experian Business Report
SOS
Proof of Business Ownership:
Sole Prop – Filed Business License
Copy of Most Recent 1040 Schedule C
C-Corp Copy of Most Recent 2nd Page of tax form 1120
S-Corp Copy of Most Recent K-1’s
LLC Copy of Most Recent K-1’s
Partnership Copy of Most Recent K-1’s
**Signed Credit Application supported by information reported by PayNet, D&B and/or SOS provided there is no other information that leads you to believe there is other ownership.
Proof of Time in Ownership: (required only in cases where the information may suggest a change in ownership)
Copies of the following for the appropriate year to satisfy the TIB
requirement:
Sole Prop – Filed Business License
Copy of Most Recent 1040 Schedule C
C-Corp Copy of Most Recent 2nd Page of tax form 1120
S-Corp Copy of Most Recent K-1’s
LLC Copy of Most Recent K-1’s
Partnership Copy of Most Recent K-1’s
Geographic & Regional:
Louisiana: Restricted
Arizona: Spouses Guaranty is required
Florida: Transactions in Florida are acceptable but
require a higher level of credit quality and
additional requirements:
Landlord Waiver is required on all transactions
Texas: Copy of Articles of Incorporation are required
on all submissions.
Expansions:
All requests for expansions require full financial disclosure and five (5) years Time in Business of existing location under same dba name and under the same
ownership. Exceptions may be made and will be considered on a case by case basis. No restaurant expansions will be considered.
Minimum Transaction Size:
Transactions should equal or exceed $5,000.
Bank Statements:
All applications must be submitted with at least three (3) prior consecutive months of bank statements. Statements should report an acceptable depository
history for the nature of business and a desired minimum average balance of $10,000. Average balances of less than a Low Five (L5) will be considered on a
case by case basis and may require additional information to support the request.
Industry:
Generally, the applicant’s business should be in an established industry with a proven track record.
Restricted Industries:
Adult entertainment
Automotive dealerships
Gaming/gambling
Internet service providers
Limo Services
Mining
Mortgage Companies/Brokers
Movie production (not to be confused with Video Production which
is acceptable)
Oil and gas exploration
Printing
Real Estate Companies & Brokers
Rental, Musical Instruments
Tanning
Trucking – Independent owner/operator
Trucking – Long Distance
Vending-food/beverage & route sales
Video rental/sales
Industries requiring a minimum of five (5) years time in business:
Construction & Related (All)
Garment manufacturing
Hair care/Beauty Salons
Health/Fitness Clubs
Laundry/Garment services
Research & Development
Rental, Durable Medical
Restaurants – Minimum five years per location
Software development
Transportation/ Local Trucking & Hauling
Industries requiring five (5) years time in business AND financial
statements:
Churches
Logging
Not-for-profit organizations
Restaurants
Spas – Retail
Local Trucking (Acceptable):
• Individual owners who haul their own goods, i.e. Sole-proprietor pellet company that is acquiring a truck to transport its product to the market (proof required – copies of contracts should be provided with each submission to satisfy this requirement). Requires five (5) years time in business.
• Trucking companies that haul products in a local market (proof required – copies of contracts should be provided with each submission to satisfy this requirement). Requires five (5) years time in business.
Sale Leaseback Requests:
Sale Leaseback submissions may be considered for equipment purchased within 90 days of the approval / review date. Financial statements are required for all
requests.
Private Party Sale and Refinance of any kind:
Financial statements are required for all requests. In addition to financial statements, requests to refinance will require a complete write-up detailing the reason for the refinance, payment history from existing lender, copy of the original equipment invoice, current photos of equipment and a current condition
report. Independent appraisals may be required for both PPS and Refi’s.
Equipment:
The equipment should be essential and relevant to the business. Please provide a summary narrative with your submission that includes details on the equipment, its use and justification for the acquisition. If software and/or soft-costs exceed 25%, term is not to exceed 36 months without prior approval.
Equipment Limitations: Limitation
Alarm/monitoring systems 36-month term and $1 residual
Computer hardware [new] 48-month term and $1 residual
POS Systems 36-month term
Software Only 36-month term and $1 residual
Rental Equipment 36-month term and $1 residual
Fixtures, HVAC Term not to exceed life of location lease agreement and $1.00 residual
Used Equipment 48-month term for hard assets
36-month term for all other unless approved in advance by Apple Capital Group, Inc.
Equipment should not exceed 10 years in age. Any equipment older than 10 years must be approved in advance by Apple Capital Group, Inc. Photos, condition report and comparables are required. Appraisals may be required if adequate pricing information is not available.
Restricted Equipment:
Aircraft
ATM
Amusement rides
Auto Dialers
Awnings/Canopies
Cellular/Mobile Phones
Communication Towers
Concrete Forms & Molds
Energy Saving Devices and Fixtures
Gambling Equipment
Hazardous/toxic waste systems
Inflatables
Kiosks
Leasehold Improvements
Marine
Medical, anesthetic
Medical, invasive
Musical Instruments
Non-portable buildings
Rental, Durable Medical Equipment & Supplies
Scaffolding
Signage
Storage Tanks – Hazardous Waste
Tanning
Trucks – New or Used (Class 7 and 8)
Watercraft
Underground equipment or tanks
All Specialized equipment
Financial Statement Requirements
Financial statements are required on transactions exceeding the Application Only limits as stated:
Required on all Tier 1 and 2 transactions greater than $50,000
Required on all Tier 3 transactions greater than $25,000
Financial statements might also be requested on applications that lack adequate public data for the amount of the transaction, recent borrowing activity of a lessee, or to support a weaker “App Only” transaction.
Financial Statements:
Package should include:
• Most recent year end income statement and balance sheet
• Tax returns if statements are not audited. If most recent year end is more than 6 months prior to submission date, most recent month end interims are also required.
• Optional; Current personal financial statement
• Optional; Most recent year end tax return for all guarantors.
Commission Limits:
See most current Apple Capital Group Rate Sheet for commission limits
Apple Capital Group, Inc., Application Submission Guidelines
Application information should include complete company information with ownership, bank and trade references, vendor and equipment information. A brief summary narrative should also be included describing the lessee’s business and the equipment justification.
A signed and dated (within 30 days of submission) credit application must be included with each submission.
Due diligence should be provided validating key areas:
Nature of business:
Apple Capital Group, Inc., uses NAICS codes to identify industries. It is important to fully understand what the lessee does in order to assign to the correct industry code.You can find the NAICS codes at: www.census.gov/cgi-bin
Time in business:
Verification of stated time in business under current ownership should be provided at time of submission.
Ownership Disclosure:
Personal guarantees are required of any owner or shareholder with 25% or greater ownership. Disclosure of 100% of the ownership is required.
Bank Statements:
The last three (3) months bank statements are required with minimum average balance of $10,000.
Equipment information:
Please provide a complete and detailed description of the desired equipment along with an equipment justification narrative. Used equipment may not be older than 10 years old to be considered. All used equipment requires photos, condition reports and comps for review.
Vendor Information: Vendor information is not required at time of submittal however complete vendor validation will be required at time of funding.
Split transactions: All split transactions must be identified at time of submission. Please make sure to disclose any transactions you have previously placed as well as other financing the lessee is seeking in addition to the subject request. A transaction is split if you have funded another transaction within the past 90 days
or you plan to fund additional transactions within the next 90 days.
Submissions to other Funding Sources: A broker must disclose to ACG if they have submitted a transaction to another funding source prior to submitting it to ACG and the disposition of that submission.
Re-Brokered transactions: ACG does not accept applications that have been originated by one broker and submitted by another unless prior written approval has been granted. If it is determined that an application has been re-brokered without prior consent, any and all approvals for the submitting broker will be
cancelled and the broker relationship terminated.
