Cash Flow, the first form of repayment, is the number one way borrowers have the ability to repay.
The first form of repayment is cash flow.
Traditional sources such as banks have long looked at capacity to repay, followed by willingness to repay.
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What is looked at in order to assess cash flow? In most cases, financials. That means the last 2 years tax return, plus an interim Profit and Loss statement and Balance Sheet.
However, the financials only give an accountant created, dated picture. The most current business checking account statements should be included in the review.
Keeping foremost in mind that cash flow will almost always be what allows repayment, business owners should review the most recent cash flow numbers before approaching a lender.
If the numbers are not attractive, the applicant should re-consider waiting.
Apply when the numbers in their checking account go up, or until their accountant reviews their interim Profit and Loss statement.
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