Finance & Lending

Debt financing is a term that describes any type of borrowing money where the borrower makes payments to the lender with interest, whether automatically applied or as a term for late payments. It gets its name because the borrower has a “debt” to the lender.   It’s the preferred method of financing for most businesses as the business owner or owners maintain control over the… Read more »

Soft inquiries, also known as soft pulls, are when someone looks up your personal or business credit score on your credit report with one of the three credit bureaus to see how creditworthy you are. Soft pulls are normally done when you apply for a job, when a company or research firm is interested in marketing to you, or any other… Read more »

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 »