Business owners need to think more like the lending institutions with which they are working. Too many business owners, for instance, may manage down income to avoid a heavy tax burden, while a lender looks at net income and true profitability. An understanding of what loan officers look for can help you put your business in the best possible shape to secure funding. Years in business. The historical operating performance of a company is a key factor in any credit decision.
Lenders look for stable, upward trends in revenues, earnings and cash flow.
Dramatic increases, as well as deteriorating or erratic trends, may raise questions. They prefer audited or reviewed financing statements with footnotes as opposed to tax returns. Balance sheet strength. Lenders look for strong equity. Ability to repay.