The borrower's position
Look at the business profile, trading history, financial information and ownership. These tell a lender about the experience and capacity behind the deal.
The purpose
Check whether the stated business purpose is clear and genuine, and whether it makes sense for the amount and term requested.
The security and its ranking
Review what is offered, whether it is first or second ranking, and the loan-to-value position.
The exit or repayment position
Consider how the loan will actually be repaid. A credible, evidenced exit, such as a sale, refinance or trading cashflow, carries more weight than an intention.
The term
Check whether the term matches the stated purpose and the expected exit timeline.
Questions worth asking
Before committing, ask:
- what happens if the exit doesn't occur on time
- what the combined loan-to-value position is if there's a first mortgage ahead
- what happens to funds if the opportunity isn't fully funded
- what fees apply
