Character

Character

A lender's evaluation of a borrower's character can fluctuate greatly between lending institutions and lending officers. Many small businesses have found more success "selling" their reputation and good character to smaller community banks. Smaller banks are typically more directly affected by the financial/economic health of the surrounding community it serves.

The traits that banks view important when they evaluate your character are:

A successful previous business
A relationship with the lender such as prior credit
Referrals by community leaders
References from professionals such as accountants, lawyers, and business advisors
Community involvement

Most banks believe evidence of a potential borrower's "character" is the amount of investment that the borrowers are willing to commit to the business. Many lenders want the owner to fund around 50 percent of the cost of the startup. A lower investment by a potential borrower may imply a lack of owner confidence and dedication.

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