There’s almost no greater time that citizens are looking for commercial loans other than a down economy. Simultaneously, lenders have the opportunity to be selective about who they lend to when only a small portion of people will fit all of their needs to borrow.
One could seek out a commercial loan for a variety of reasons, be it a home loan, car loan, or other significant life event that simply cannot be avoided. It’s important that lenders and borrowers alike know the key components that will be considered when considering a loan.
According to Scotsman Guide, a resource for mortgage originators, there are five important points to consider when looking to borrow:
- Credit score and history
- Net Worth
- Ownership Experience
- Free Cash Flow
Many lenders will begin by evaluating your net worth and liquidity, which involves more than just subtracting liabilities from assets. In order to present yourself as a valuable borrower, lenders will want to see detailed financial statements of your spending and properties. These financial statements should also include all liquid assets, such as stocks and bonds.
In addition to these assets, it will also be important to show a potential lender your various types of ownership in the past. These past ownerships combined with past spending will amount to the ever-important credit score, which will be evaluated in any type of borrowing situation. The last important factor will be free flow cash, or, cash that’s left over once necessary expenditures have been attended to. A lender wants to know that borrower can have many options for supporting themselves, increasing they’re reliability to pay back the loan.
Worried that you might not meet all of these requirements? Stay tuned for our next piece on how to improve your credit and net worth.