Does the business have sale-able assets like real estate to secure the loan with? Does the business have receivables? Does the business have Capacity to repay the loan? Is the business profitable? What interest rate can the business afford? Small businesses do not have many options when it comes to getting a loan from a bank. Banks want to see a business has been profitable for the past two years. Banks want to know that their loan is secure and will be repaid. Banks are risk averse, meaning they only lend on a sure thing. For example, banks look for scenarios like this: A borrower asks for $100K to buy a building that is on sale for $200K. The building is rented out at a rate of $20K a year to a national corporation for the next 15 years, and the borrower is putting $100K. Banks love deals like this. They usually charge a low interest rate of prime plus 2%. For Small Business Owners, this does not work.
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