To qualify for small business loans that lenders provide to the borrowers, one must understand how they work. Bankers or lenders do review loan applications before they approve the loan on some basic guidelines.
Trustworthiness of the borrower – The bank judges the trustworthiness that the borrower brings with him in terms of experience, knowledge, credit history, references etc.
Ability to pay back – The lenders also look at the capacity i.e. the ability to pay back the loan. Not only is the cash flow of the business reviewed but different repayment options are also planned out in course of default from the borrower
Collateral – To mitigate the risk of lending, collateral is obtained to secure the loans lent out to the borrowers. Collateral can include equipments, real estate securities etc. A personal signed document is also obtained against the collateral that the borrowers provide to the lenders for small business loans in New York. In New York, collaterals have high value making it a good investment for loans.
Conditions- Loan conditions are also reviewed by the lenders. The usage of loan such as buying equipments etc is also taken into consideration. Customer base, competitors, marketing strategies etc are also looked into while extending a loan. New York is a hub for entrepreneurs and hence business conditions are not only tough but also varied in nature.
Capital invested – An investment into his own company by the borrower is a positive move. It shows the confidence and the ability that he can repay his loan shows the passion that the entrepreneur has, motivating the lender to do the same. There will be banks and lenders not willing to take the first jump of investing money. If the borrower himself provides for capital initially the lenders are sure to look it up.
There are many other qualifications that borrowers in New York have to go through. From credit scores to references, each lender have different criteria that needs to be fulfilled while obtaining small business loans.