Jim’s banker liked him but there was no basis for a loan. Even prior experience didn’t justify consideration.
The business was well constructed. and lean with outsourced production, no offices, and a short-chain to customers. Unfortunately, that meant no collateral to secure a loan. Little Inventory, no real Accounts Receivable, and no equipment other than desk equipment for Jim.
The banker saw no loan without Jim committing personal assets. The bank’s policy was to have collateral valued at 120% of the loan pledged to secure it. Once Jim balked at committing his house and investments, the banker had little choice but to turn him down. He hoped collateral was a number Jim had in his head as well.
Banker’s Decision (No loan without Collateral) Removed yes
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