By Parag Nevatia

Would you let anyone borrow your money over a handshake? Or with the most powerful contract in writing?

I bet you would think many times either way, especially if it is over a handshake. One understands every risk involved when it is their own money at stake.

The concerns are the obvious – what if the person misuses it, and more importantly, what if they cannot or will not pay back on time. The fact is that you do not want to be chasing the borrower, especially not through court as it could end up costing you substantially in time and money.

In any case, the risks are still possibilities, but what can you do to minimize your risk? You can analytically assess the level of risk before deciding to let someone borrow your money.

Similarly, Lenders look at you under the same limelight when you apply for a business loan.

So here are some things for you to consider and prepare before applying for a business loan:

Personal Risks

Personal History

  • Who am I?
  • Does my education and relative work experience reflect clearly on my Resume?
  • What are my professional goals?

Credit Score

  • How is my track record of paying back creditors?
  • How much debt do I carry prior to asking for more debt?


  • Do people know me and my work ethics/capabilities?
  • What do people have to say about me/my character?

Income and Assets

  • Do I have other sources of income, or spousal income?
  • Do I, or my spouse, have any assets/collateral to liquidate and pay down the debt if I have to?

Personal Egos

  • A tough business decision is more prudent to a decision made over emotions
  • Am I bringing logical solutions to my bleeding business or am I postponing winding it?
  • At times, personal egos can be key to not being able to obtain financing

Business Risks

The Business Model

  • How does the business make money?
  • What is the cash flow cycle?
  • Are there seasonailities?

Industry Risks

  • Is the industry overall improving, average, or declining?

Type of Clientele

  • Does the business have enough clients?
  • Diverse clientele?
  • Is there a concentration on a particular set of clients?


  • Is the business dependent on location?

Marketing Strategy

  • Is the business meeting all aspects of marketing? Public relations, media planning, product/service pricing, distribution, sales strategy, customer support, market research and community involvement.

Payment Method

  • Are the payment methods quick and convenient for customers and the business?
  • How efficient and effective is the follow up strategy with customers?

Infrastructure and logistics

  • What are the roles of the employees? Are they effective?
  • Is there a shortage or overflow of employees?

Technology Implementation

  • Has the business deployed necessary technologies across all platforms, to increase business, identify inefficiencies, and improve processes?

Once all of these questions have detailed, logical and realistic answers, you will be in good shape to pitch your business/yourself for financing…and maybe you will also consider gathering all of this information before lending your money to someone.


Parag Nevatia is a principal of EZ Funding Solutions LLC which is a certified Business Loan Advisory and Project Finance Consultant Firm that has developed a unique solution to the Small Business Administration (SBA) lending platform that gathers all relevant and precise data up front. They do SBA eligibility tests, risk analysis, feasibility analysis, mitigation, project presentations, underwriting and loan-closing due diligence, all under one platform in order to increase accountability, loan approvals and loan closings.For details on us please go to or call 908-922- 5527.