A 'strong' guarantor will have liquid assets sufficient to cover all personal debt requirements, with excess available to support business debt payments. When a bank takes inventory as collateral, they look for assurance that the inventory number reported on the balance sheet reflects an accurate and reliable value. They will want to assure that the balance sheet does not contain obsolete inventory and is regularly adjusted for shrinkage. Some forms of inventory are prone to theft, obsolescence, or are perishable. There should be a physical inventory regimen and inventory reconciliation system appropriate to the type and number of inventory items carried.
Many companies perform weekly, or even daily, spot item checks, or cycle counts.
Bankers will want to see that business owners are on top of trends in their industry. They will also ask if the company has hedged against risks for which they may have little control, like changes in state or federal regulations, or economic swings. One of the most obvious and universal risks today is technology risk, where new products and existing product improvements occur at a blinding rate. No matter what products or services are provided, there is another business trying to do it better, faster, cheaper, or is on the brink of inventing something that could render their product obsolete. Because of this, banks feel more comfortable with companies that have at least some product diversity.