Finance & Lending

A personal guarantee is a legal commitment where the borrower guarantees they will be personally responsible for any debts in case of default on a small business loan. Personal guarantees create a personal liability for the debt rather than pledging specific assets as collateral.    It is very common for lenders to require a personal guarantee, including when the borrower is “creditworthy,” meaning they have strong financials and a good… Read more »

The Debt-to-Income (DTI) ratio measures how much of a borrower’s gross monthly income remains after paying down debt. Lenders use this ratio to gauge whether the borrower has enough disposable income to take on new debt obligations and still maintain their lifestyle. The ratio measures a borrower’s total required monthly debt payments on consumer credit… Read more »

The loan to value ratio or LTV is a measurement of the risk level for the lender based on the amount of money being borrowed compared to the asset being purchased. It is most often used for assets that serve as loan collateral.   When the risk is lower, the lender may be open to offering… Read more »

AI systems like ChatGPT, Perplexity, and Claude (also known as LLMs or Large Language Models) can be used to help find and fix errors on your business loan application, reword sections so they’re clearer if you get stuck with phrasing, and help with the business plan portion including forecasts and charts.     This technology can be… Read more »

Lenders require a deposit, also known as an equity injection, on a business loan between 10% and 35%, depending on the type of business loan. This is a way to recover some of the losses if the borrower defaults on the business loan. Loan deposits are standard procedure when taking either large or small amounts… Read more »