Category: The Lending Business

One of the biggest challenges faced by lenders is that of assessing potential borrowers’ creditworthiness. Lenders need to be reassured that the potential borrowers are creditworthy, before lending them money. The main question that the lenders usually ask themselves in this regard is as to whether the borrowers are likely to repay the money, once it is lent to them. And in order to get an answer to this question, they usually look at 3 things. In other words, there are 3 main ways in which lenders go about assessing borrower’s creditworthiness, namely: By looking at the borrowers’ earnings: upon looking at a person’s earnings, it is possible to tell how much money they can afford to borrow (or, in this case, how much they can be viably lent). Thus,…

The lending business is not as easy as it looks. Talk to any person who is involved in the lending business, whether that happens to be a bank manager, a credit union manager or even a shylock, and they will tell you that the lending business is not as easy it as it looks. It is a very challenging business. Therefore, before getting into any sort of lending business, you need to be aware of the fact that there will be challenges. Some of the specific challenges to expect in the lending business include: Securing funds for onward lending: one option here is that of borrowing money at a low interest rate, and then lending it to other people at a higher interest rate. But you see, there is the…

There are certain things you need to do, if you wish to succeed in the lending business. Whether you are operating a lending business as a pawn-shop operator, a micro-finance lender, a credit union or a mainstream bank, the basic principles are all the same. So in today’s article, we will be looking at those things you need to do, in order to succeed in the lending business. And without any further ado, if you wish to succeed in the lending business, you need to: Exercise prudent lending practices: this is where, for instance, you need to subject clients to creditworthiness checks, before giving them major loans. It is also where you endeavor to only lend people money that they can comfortably repay. Maintain good relations with your clients: here,…

One of the main ways in which you can get your business to grow fast is by working with lenders. A business requires funds to grow. And one way to get the funds is by borrowing. Actually, in many cases, the best way to get the funds your business requires to grow is by borrowing. The other alternatives – like bootstrapping using your own resources or selling equity in exchange for funding – are often unviable. So, in such cases, you are left with no alternative but to work with the lenders, if you want your business to grow. Working with lenders to grow your business typically entails: Identifying the appropriate lenders to work with The first step you need to take, if you wish to work with lenders to…

How do lenders protect their interests? This is a question that comes up frequently wherever banking courses are taught. We all know that the business of lending people money is a risky one. There is always the possibility of people borrowing money, and then disappearing – never to be see again. Then there is the possibility of lending people money, only for them to fail to repay because of unavoidable reasons such as illness. So, given these very real possibilities, how do lenders protect their interests? Well, there are some four key ways in which the lenders ensure that their interests are well protected. Firstly, the lenders undertake lots of background checks, to ensure that they only lend money to people who are creditworthy. They look at things like a…