What do banks want?
I continue to field questions from business owners on what banks are looking for in order to extend credit or make a loan. It is pretty much the same from all of them. Here you go:
- They want to see a debt-service ratio of 1:1.25
- Collateral: They want to see 10 – 20% of the amount of the loan in cash reserves
- They want to see a strong credit score (>700)
- They want personal guarantees
Needless to say the banks’ loan volume is currently a little sparse. Most of the bankers that I speak with are focused on deposits, not loan activity.
Check back next week and I’ll speak to methods to fund your business while your getting your debt-service ratio where it needs to be.
by: Terry L. Massey