Underlying Factors Why Banks Do Not Give Loans

loans servicing is a risk to any financial institution that is why extreme caution is taken while giving out a loan to an individual or a corporate body. In such loan creation by banks to the public, certain conditions not been met by the intending borrower would hinder the loan issuance.

Such factors that could hinder or prevent a bank from giving out a loan to the borrowers include:

Insufficient collateral.

Lack of consistent cash flow.

It is believed that these two factors mentioned above are common and self explanatory. Now let’s move to the uncommon factors that some people might not know about. This includes:

Insufficient Operating History:

This majorly occurs amongst businesses that want to collect loans from the bank without sufficient track record of performance history of the business or company. This factor would most likely discourage a bank from giving out loans to such businesses.

Weakening Industry:

If you operate a small scale business whereby you do not make any reasonable profit or the bank perceives such industry would decline in future would most likely not give out loans to such industry to avoid loss.

Economic Situation:

Banks would not give out loans to industries that might be affected by an economic unfavorable condition that might hinder the business from paying back the loan in good time.

 

On the other hand, if banks or financial institutions were non-existent, what other source can a business get loans from except from Family and friends?

 

 

Comments Reply
  • No one should expect loan from any financial institution when there's recession

    - Obaji ifeanyichukwu - 2019-08-19 16:31:06 Quote

  • From the government and perhaps other bussiness organizations.

    - Lubem Terzungwe - 2019-08-19 16:34:24 Quote

  • Without banks, family and friends i don't think thereis any other way to get a loan.

    - Moses Osgood - 2019-08-19 16:35:47 Quote

  • 1. Lack of Trust from Customer.

    2. Betrayal from Past Experience.

    3. They Also need Money for Investment.

    - Aina Bamidele - 2019-08-19 16:39:01 Quote

  • The government should try and create a body that can provide loans for citizen 

    - Lakesyde Themy - 2019-08-19 17:19:05 Quote

  • Venture angel or a business capitalist.. an also there are some soft loans given buy government from time to time with small interest rates, but the political office holders do hijack this... Lian's can also be gotten from bank if industry.

    - Aguebor Pascal - 2019-08-19 18:22:36 Quote

  • Government should try and create an avenue where poor business owners can get loans, this terms aren't easy to meet up to. If these loans are to alleviate poverty and help small business owners, then such terms are too high handed. 

    - Chukwuemeka Ekelaka - 2019-08-19 18:27:22 Quote

  • Most banks don't give loans because people find it hard to pay back or it takes time

    - Michael Ekhafe - 2019-08-20 09:19:37 Quote

  • Of course no bank would want to collapse in most cases people find it hard to return loans

    - Henry Yusuf - 2019-08-24 07:12:02 Quote

  • Government should try and create an avenue where poor business owners can get loans, this terms aren't easy to meet up to. If these loans are to alleviate poverty and help small business owners, then such terms are too high handeVenture angel or a business capitalist.. an also there are some soft loans given buy government from time to time with small interest rates, but the political office holders do hijack this... Lian's can also be gotten from bank if industry.

    - Abdullahi Nurudeen Olayiwola - 2019-09-18 12:38:53 Quote

  • I think the summary of what this post is saying is that low or unimproved technological gadgets have led to the reason why banks don't grant loans. Then if that's the problem, it's a minor one. What the government should do is to get better technological gadgets.

    - Emmanuel Agbasielo - 2019-10-03 20:56:30 Quote

  • To me bank loans is not good.. He has is own advantage and disadvantage... Bank loans has made many people rich and he has killed a lot of people and give them serious sickness... So bank loans is like about life and death.. It not good in financial 

    - Morrison Preye - 2019-10-13 18:29:03 Quote

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