The proven positive ability of individuals to manage the resources of their business is a prime consideration when determining whether or not a loan will be made. 

Character and Managerial Capacity

Character is the personal impression you make on the potential lender or investor. The lender decides subjectively whether or not you are sufficiently trustworthy to repay the loan or generate a return on funds invested in your company. 

Managerial capacity is an important factor, and your educational background and experience in business and in your industry will be reviewed. The quality of your references and the background and experience of your employees will also be considered. 

Key Ratios

Mathematical calculations on historical and projected financial statements form ratios that provide insight into how resources have been managed in the past. It is important to understand that no single ratio provides all this insight, but the use of several ratios in conjunction with one another can give an overall picture of management performance. Some key ratios all lenders review are:

• Debt to worth;
• Working capital;
• The rate at which income is received after it is earned;
• The rate at which debt is paid after becoming due;
• The rate at which the service or product moves from the business to the customer