When considering whether to grant a small business loan what return on
investment do banks look for in a start up small business's business
plan?

---

Request for Question Clarification by ragingacademic-ga on 05 Dec 2002 15:00 PST

bytebak - 

Are you seeking the technical qualifications a bank will look for - or
an informed opinion from a business perspective?

Typically, banks will look for metrics far more tangible than ROI,
which would be a function of a bunch of business plan assumptions. 
You could probably gain access to such information by simply going to
your nearest bank and sitting down with a commercial loan officer.

If you would like, I could comment on what you would need in order to
secure such a loan - but I could not provide you with actual metrics.

Thanks,
ragingacademic

---

Clarification of Question by bytebak-ga on 05 Dec 2002 20:37 PST

I would appreciate advice on how to prepare for the questions that a
commercial loan officer would ask.

May I please suggest that ROI may not be terribly relevant to a
lender, but rather debt service coverage might be the primary
measurement of the desireability of a particular deal, particularly in
a start-up or seed capital deal.

Although some might argue that ROI, if high enough, yields an adequate
and highly protected debt service ratio, I can imagine scenarios where
a high ROI may be related to a company with an enemic debt service.

Business success, in my humble opinion, is cash flow, cash flow, cash
flow.

weisstho-ga