What are good borrower qualities is similar to Prospective borrower quality. Good borrower means any person who seeks to borrow money to finance in business , construction, export or import trading, fisheries or agricultural sector.
Bank look for some special point to select a Prospective borrower some of are given below.
1.Credit-worthiness. Bank or financial institutions have to deal with the applicant’s credit history, their capacity to pay, and in some cases, the value of their collateral., stable incomes, loan payment history, and liquid assets.
2. Management skills. Banks not only justify proof of income, but also proof of business management policy, ownership of assets, and so on.
3. Sense of integrity. Integrity means Keeping word in all financial agreements. The lack of integrity is the main reason for a long history of lost wealth and damaged relationships—both business and personal.
4. Sense of prudence. A good borrower does not bite more than he can chew. He will only borrow what he can pay. Some borrowers are not aware of their debts, they take loans from so many sources.
5.Purposeful spending. The best indicator of a successful loan is what ultimately do with the cash. Borrowing isn’t bad if it have used a solid purpose. By analyzing of all above criteria will help to select a prospective borrower.
6.Credit History: Lenders want to review credit history of business and personal credit history of businessmen either personally or other bank credit history.
7.Collateral Security status: A secured loan must obtain a collateral security. Collateral is simply defined as property that secures a loan or other debt, so that the lender may be seize that property if it fails to make proper payments on due date.
8. Income history: Lenders want to know borrower have sufficient and consistent income. Because income requirements based on the amount of borrow.
9. Debt-to-income ratio: Closely related to income and debt is debt-to-income ratio. This looks at monthly debt obligations as a percentage of monthly income. Lenders like to see a low debt-to-income ratio.
10. What are good borrower qualities in Value of collateral: Collateral is something that one agree to give to the bank if he are not able to keep up with the said loan payments. The value of collateral will also determine in part how much one can borrow.
11. What are good borrower qualities in Liquid assets: Lenders like to see that borrower have some cash in a savings or money market account, or assets that borrower can easily turn into cash.
12.Accounts receivable: Lender want to see how much a borrower account receivable amount and its return percentage.
13. Equipment and machineries : If the equipment is new, the bank might agree to lend 75 percent of the purchase price; if the equipment is used, then a lesser percentage of the appraised liquidation value might be advanced.
14.Securities: Marketable stocks and bonds can be used as collateral to obtain up to 75 percent of their market value. Note that the loan proceeds cannot be used to purchase additional stock.