What Do Lenders Look For While Sanctioning A Business Loan?
- December 15, 2014
- Business Loans
- No Comments
Any company can apply for a business loan but it is the lender who decides on whether the loan can be sanctioned or not after evaluating the loan application. Factors like cash flow, credit score, collateral, balance sheet are all monitored before the sanction of a loan. The sanction amount can be the same or may differ depending on the existing debt. A cash flow determines your ability to repay; it is the forecast of your business plan. It is easier to secure a loan if you have assets. The loan is sanctioned depending on the value of the assets. Incase you fail to repay; the assets will be attached by the lender. Credit scores play a vital role in deciding your commitment towards the loan. If you have a healthy score, it is easier to procure a loan. A healthy balance sheet talks about the character of your business and can come handy while securing a loan.
What if you do not satisfy the above set criteria?
No worries, you still stand to get a loan but be prepared to pay a high rate of interest. Unsecured loans come at a high interest rate due to the risk factor. If your business is in a crisis and you need funds to sail over the storm there is definitely help around the corner. Lenders do offer loans for businesses with poor score or no assets. All you need to do is to shop around to identify the lenders that are prepared to take the risk.
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