FINANCING

We have all heard people say "when you need a loan, you can't get one" or "banks only lend money to those who don't need it". This may be the way we feel at times but the fact of the matter is that banks are not risk takers nor are they in the business of owning real estate or business opportunities.

A bank or lender's primary function is to LEND MONEY; therefore, any decision's that are made in regards to loaning money are that of risk management. The question is, how do you convince a lender that you are a good risk and will be able to repay what you borrow.

As with any risk assessment procedure, it is understandable that people often feel frustrated when searching for a loan.

This frustration can, in many cases, be prevented or at least minimized by doing a little homework ahead of time.

Let us take a look at some of the factors that lenders use to determine risk:

Borrowers

• Cash on hand
• Personal Credit History
• Personal Net worth
• Collateral
• Personal Cash Flow (Spending Habits)
• Business Experience (Resume)

Business

• Historical Cash Flow (last 3 years min.)
• Collateral
• Current management Vs. new management
• History of the business