The client's ability to repay the loan.
What Should The Bank Consider Before Lending Money To Their Business Clients?
Bank has to check whether the client can pay the loan back or not. Also check clients past history if he/she took a loan before and pay it on time or not.
The bank has to assess and calculate the risk involve . Generally the great risker for the bank of being not repay is the higher the interest rate they charge.
Banks have more complicated risk assessment methods for corporate bussiness. First business have to asset for mortgaged or a good business plan. Then consider the client's ability to repay the loan. Banks must find the balance between liquidity and maturity . They also have to find balance yield and risk.
Banks have more complicated risk assessment methods for corporate bussiness. First business have to asset for mortgaged or a good business plan. Then consider the client's ability to repay the loan. Banks must find the balance between liquidity and maturity . They also have to find balance yield and risk.