Different lenders and products use different underwriting methods. Still, most reviews are trying to answer several common questions.
Who is the borrower?
Entity status, ownership, time in business, industry, licenses and the experience of the people responsible for repayment.
How does the business perform?
Revenue, gross margin, operating expenses, profitability, cash flow, seasonality and the quality of financial reporting.
What obligations already exist?
Loans, leases, merchant advances, tax obligations, liens, judgments and recurring payments affect capacity.
What will the money do?
A defined use of funds is stronger than a vague request. Equipment, inventory, acquisition, receivables or working capital should connect to a measurable operating need.
How will it be repaid?
The repayment source may be operating cash flow, contracted revenue, asset sale, refinance or another documented event, depending on the transaction.