Business Ethics
Financial constraints nowadays have rendered many small and medium-sized enterprises find it challenging to operate as money drawn from their pocket is insufficient and extra finances are needed to execute duties and improve profit margin successfully. The scenario is worsened by banks employing bottleneck rules of borrowing, resulting lenders question the authenticity of borrower’s capabilities to repay the loan when approved (Helena, 2020). Therefore, lenders at present depend lightly on financial facts and put more emphasis on their experiences with the market and law as well as considering social history and instincts when approving or denying loans.
Considering experiences in the market before approving loans especially in the restaurant business, enables lenders to comprehend customers served and how good is the market as well as assessing competition and ways of outdoing their counterparts. The approval of loans would be considered viable when market and competition are suitable since the chances of recovery will be raised by continuing revenue and growth of the restaurants (Glantz, 2015). Also, market information gives vast data that enables lenders to have prior knowledge about the nature of the business, which is significant in giving loans. Conversely, lenders reject loans to business entities which have questionable market viability and failing the maintain competition standards as they have lower chances of recovering loan.
Creditors consider giving loans to organizations that comply with law and business policies. Organizations with a good history of complying with and maintaining the laid regulations have high chances of borrowing and paying loans. Giving loans, especially to organizations dealing with medical operations, requires lenders to be observant of following laws and regulations as they attract huge fines and losses when defaulted. Therefore, lenders will only approve loans when policies and laws are duly followed to avoid commotions with authorities. Also, following rules easies loan recovery as all entities understand the repercussions of failing to adhere to loan agreements.
The history of the business is significant when establishing grounds for credit loans. Lenders understand the source and growth of the business and devise ways to combat the challenges. History demonstrates various business expertise and the ability to adapt to changing market needs (Helena, 2020). Therefore, as a lender, loans will be approved when the business entities have a clear and outstanding history in the market as services offered have been approved by the target customers. Also, history enables lenders to access the stability and levels of competition in the market, thus positioning the business viability in giving and recovering loans. Lenders avoid businesses with a long history of slow growth and easily attacked by competitors, and mostly, the loan is denied.
Instincts are considered paramount as they help in making more informed and confident business-decisions, especially on occasions of giving loans to other business organizations. Applying instincts when giving loans to accessing the viability of giving loans enables lenders to analyze possible opportunities and evaluate probable opinions, thus making informed decisions about lending (Mel, 2016). Similarly, following instincts help lenders develop positive feelings and emotions towards giving loan, which raise the possibilities of loan recovery and repayment by the organizations. Many lenders will deny loans when their instincts and guts present more negative options, which will hamper their decisions, thus consider disapproving of the loan. Also, when instincts present undesirable feelings and emotions towards loans, lenders judge that the business entity is unsuitable for securing credit loans.
References
Mel, R. (2016). Why Your Instincts Can Help You Achieve Your Goals. Personal Development blogs. https://www.success.com/why-your-instincts-can-help-you-achieve-your-goals/
Helena, H. (2020). What Lenders Look for in a Business Plan? Business Plan Journals. https://articles.bplans.com/what-lenders-look-for-in-a-business-plan/
Glantz, M. (2015). How banks evaluate your loan application. Navigating the Business Loan, 21-38. https://doi.org/10.1016/b978-0-12-801698-5.00002-9