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How do you convince a bank to give you a loan!
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[QUOTE="Caramelle, post: 207019, member: 150"] [JUSTIFY]The 5 C's of credits are the usual criteria that banks use to evaluate a company's eligibility for a loan. Character is often evaluated based on the loan applicant's perceived willingness to pay the loans based on past actions towards previous loans. An applicant who pays on time all the time will have a better chance of securing approval for a new loan. Banks will normally review the company's financial statements to see if the ratios match up to its standards. They will usually look at the current ratio to determine the bank's liquidity and capacity to meet payments when due. Positive income figures, as well as cash flows, are strong indicators of a company's financial capacity. The value of the collateral should exceed the amount of the loan to provide allowances for significant reductions in its value as well as to make up for the collateral's non-liquid nature. Banks are more likely to grant loans if they can see that the owners have substantial investments in the business. A quick look at the debt to equity ratio can reveal the extent of owners' equity versus that of the creditors. Finally, banks will be interested in the prevailing economic conditions in general and in the specific industry where the business belongs. [/JUSTIFY] [/QUOTE]
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