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How Banks Make Business Loans

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Banks look beyond credit scores. Before the recession, business credit scores were often the biggest factor in determining which companies were eligible for loans and credit lines. But banks no longer trust the scores as an indicator of a borrower's ability to repay. Instead, as the Wall Street Journal reports, large lenders are looking to cash flow and collateral. "It's a lagging indicator," a commercial banking executive at Bank of America tells the Journal. "We are underwriting more on a traditional basis. We look at the full picture." Lenders continue to look at owners' personal-credit scores as an indicator of character and "intent to pay back." Check out our recent Case Study, When Your Bank Stops Lending, which looks at an audio technology company whose bank cut its credit despite the fact that the company hadn't missed a payment in three years. 

Red Bull's latest marketing gambit. It's a $220 million soccer stadium built on a former industrial waste site in  Jersey. The Wall Street Journal reports on the quirky marketing tactics employed by Red Bull founder Dietrich Mateschitz, who has sponsored airplane races, built snowboard half-pipes, and, most recently, bit big on the future of American soccer. The stadium is "the biggest and most visible foreign investment ever made in professional soccer in the U.S.,' according to the Journal, despite the fact that many MLS teams have struggled to drive attendance and only two are profitable. The unorthodox marketing stategy seems to have paid off for the drink company. The Journal notes that Red Bull has carved out a 33 percent market share despite fierce competition from larger companies like Coke and Pepsi.

Mobile Web takes off in China. The number of cell phones with Internet capabilities in China is approaching 1 billion, according to a recent report by eMarketer. Meanwhile, Techcrunch notes that although mobile subscriber growth in China is actually slowing--since most people have cell phones--the percentage of people who can connect to the Internet on their phones is accelerating rapidly.

20 NYC Start-ups to Watch. Business Insider changes the tune of their ongoing Silicon Valley vs. NYC debate to look at the actual companies that are shaping New York's burgeoning digital renaissance. Some of the names of these purported next big things will look familiar to Inc. readers--Kickstarter, Etsy, Foursquare, and Buzzfeed have graced our pages before. Hunch co-founder Caterina Fake is even on this month's cover story on productivity. But there are also some less familiar upstarts to keep an eye on, like AppNexus, which lets advertisers track and change their campaigns on the fly, and MakerBot, which makes cheap 3D printers.

Why it pays to have passion. It goes without saying that launching a new business takes a great deal of effort, but Seattle-based VC Andy Sack explains why it is important for start-up founders to have a true passion for what they're doing. Passion, Sack says, is what allows entrepreneurs to continually power through the long hours and stay motivated when they get rejected by potential customers, investors, or employees. As he puts it, "Founders inevitably will have to overcome rough patches and patches where they don't know what the right answer is. Enter passion. Passion makes overcoming this lack of answers possible and fun."

Road trip as incubator.  Here's a novel idea for how to come up with a start-up idea. Last week, 25 entrepreneurs boarded the Start-up Bus in San Francisco and spent the next 48 hours developing business ideas, which they then pitched to a panel of judges at the South by Southwest Festival in Austin. The winners, a dating site aggregator called DateBrowsr and a dorm room inventory manager called DormDorm, will receive personal coaching from Silicon Valley angel investor Naval Ravikant. Our own Nadine Heintz tracked down Elias Bizannes, the Australian tech executive who organized the road trip. "It takes a certain kind of person who is crazy enough to start a business in 48 hours and do it on a bus," he tells her.

A cheap reliable translation service? In the past we've written about the growing business of translation and language services, now TechCrunch profiles a company that aims to find the middle ground between costly translation by people and cheap but inaccurate translation by computers. The company, called Smartling, plans to do this by allowing its customers to chose between machine, professional, and crowdsourced translations. The company just raised $4 million to realize those efforts. If you're thinking of hopping into the industry you should check out our case study of a translation company that got stuck in the mud.

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Last updated: Mar 18, 2010




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