There are numerous things I would consider.
First, examine the company’s financial performance over the last five years by looking at all four financial statements.
Then consider the overall assets, and see what resources are available for use as collateral. Additionally, learn how the company has been using its resources.
Next, determine whether the cash flow is sufficient to pay off the entire debt plus interest by examining the cash coming in and going out.
Verify other measures, such as debt to EBITDA, debt to equity, interest coverage ratio, debt to capital ratio and debt service coverage ratio.
Verify that all the company’s measurements are in accordance with the bank’s requirements. Finally, consider additional qualitative elements that could show something very different from the financial data.
