Question

A company is trying to obtain a loan at the bank for $1,000,000. What financial and...

A company is trying to obtain a loan at the bank for $1,000,000. What financial and nonfinancial information do you feel the bank would like to see regarding their potential client? The company is in the bio-tech industry and has a promising treatment for a rare cancer.
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Answer #1

The financial information that the bank would like to see is :

  • Financial statements of at least last 5 years, including P&L, Balance Sheet and Cash Flow Statement
  • Ratio analysis of the financial statements, including key metrics such as leverage ratios, liquidity ratios, solvency ratios etc.
  • Details of other debt owed by the company

The non-financial information that the bank would like to see is :

  • Previous successes and breakthroughs of the company in discovering new treatments to estimate the probability of failure/success
  • Caliber of the management and R&D department
  • Threat of competitors
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