Business Loan Missouri Small
Bankers tend to wear narrow ties, and in this economy, they seem narrower than ever before.
Commercial lending is a risk/reward tradeoff, for both the lender and the borrower. From the lender's perspective, loans are provided to what they believe to be eligible, creditworthy small business concerns. Key within that concept is the term "believe", as the process is much like the medieval notion of alchemy: an amalgamation of science and magic. Not only do the numbers need to work, but faith in the borrower's character, the belief in the viability of the business and/or project, and various other intangible elements play roles in the final decision. After all, the first four words of a standard promissory note speak volumes: I promise to pay. Nevertheless, by necessity, the underwriting is strongly slanted toward the scientific aspects of the loan request.
The borrower, on the other hand, is Merlin the Magician, with a Subway Sandwich franchise agreement instead of a magic wand. Although they recognize that the math must make sense, their viewpoint is typically skewed toward the intangibles inherent within the idea or concept: the freedom, the potential, the possibilities. Much like the line from the over-hyped 1989 Kevin Costner flick Field of Dreams, "If you build it, he will come", the small business owner has faith that if they open it, the customer will come — and with that, the business will be successful.
The line between the two components is a fuzzy one, and navigating it is difficult at best even during booming economies. In recessionary times, both sides become significantly more risk averse, and bridging the gap becomes even more problematic.
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