Banks or lenders are always looking for the ideal borrower. The borrowers or small businesses in this case are always looking for the ideal lender. The irony is that what the two parties are looking for pertain to the same factors but how they look at those factors are different.
Banks look for businesses or enterprises that have a relatively sound financial profile, the need for the loan should make sense to the lender and the ability to repay draws the most stringent focus. Lenders will always try to ensure that they don’t lose money. Many borrowers think that lenders want a certainty of having the entire loan repaid. That perception is not entirely accurate. While lenders or banks will want a small business loan to be repaid in full, yet they would be willing to lend money even if they think that they can get the principal amount repaid along with some interest. In other words, even if a small business loan is defaulted and the bank makes up more money in repayments than what it had lent, but not the total interest and loan amount put together that was expected, then a business or enterprise is likely to get approved.
The concept of ideal borrower of a small business loan is slightly utopian, just as utopian as the quest of the ideal lender. But knowing who an ideal borrower is for a bank issuing a small business loan will allow you to file your application accordingly so you have greater chances of getting approved.
Banks look for details. They want to know what a company does, why the small business loan is needed and how exactly it would be spent. Banks want to know how the company manages to make the money which will go in the repayment of the small business loan. Showing a good cause for a small business loan is not sufficient, one also has to show monetization by the virtue of that loan and how the company would generate profits or revenue to repay the loan.
Banks look for assurances. Security or guarantors, bank statements and financial history are the foundation based on which a small business loan is approved. If the entire past of a company is well documented, the company has done well in the past or is doing well and it just needs some financial assistance to have some kind of fillip, then banks will consider such an applicant as an ideal borrower.