Lenders typically look for multiple sources of repayment to satisfy any business loan. These sources may range from the cash flow of the business, to the liquidation value of the fixed assets, additional sources of revenue to the buyer not attributable to the business and personal guarantees from the buyer and the buyer’s spouse.
In addition, most lenders will give significant consideration to what is referred to as the five C’s of credit. They are as follows:
- Character of the borrower
- Capacity of the business to repay debt
- Collateral available for borrowed funds
- Capital infusion by the borrower
- Conditions related to the economic climate