What factors are considered when determining a contractor's eligibility for a loan?

When determining a contractor's eligibility for a loan, credit history and a well-prepared business plan are essential factors. A contractor's credit history reflects their reliability and ability to manage financial obligations, signaling to lenders their risk profile. A positive credit history can increase the chances of securing financing.

A solid business plan, on the other hand, details how the contractor intends to use the funds, outlines their strategies for growth, and includes projections for revenue and expenses. Lenders are keen to see how the contractor plans to achieve profitability, as this reassures them that the loan will be repaid.

In contrast, personal income alone does not provide a comprehensive view of the contractor's ability to manage a business successfully; it lacks context about the contractor’s operational capabilities. Experience in the industry is important but does not directly relate to financial eligibility as much as credit history and a business plan do. Lastly, while completed projects can showcase capability and past performance, they do not directly inform a lender about current financial health or future plans. Therefore, the combination of credit history and a business plan offers a thorough understanding necessary for loan eligibility.