Transcript: What can you expect from the credit application process?

Conditions can be defined as external or internal. For external conditions it would be things like general economic conditions. And that's important because that can affect your ability as a small business owner to get credit. It can affect your customers and their ability to pay, and it can affect your suppliers and their ability to continue to provide the products and services that you need in your business.

How do interest rates affect a small business?

Well, especially in a rising interest rate environment, it can impact the small business owner's ability to get credit because it's going to impact their payments. So do they have the capacity or the cash flow to service the debt? You really want to look at your balance sheet and say, "Hey, is there some high interest debt on my balance sheet that I could possibly get rid of?"

What about the market in general? Other things in the marketplace that raise some red flags for you in terms of a business's ability to repay their credit?

It's again back to the general economic conditions. If we see unemployment rates going up, well then we know consumer spending's going to be down, and that's going to impact all small businesses, or most small businesses.

What are internal conditions?

So when I talk about internal conditions, it really starts with the business owner themselves. And do they have the knowledge and the experience to make the right business decisions when things change? And it could be a change in the economy; it could be a change in technology. So I really want to know that the business owner is on top of these things and can make the right adjustments when things change.

It really is about the small business owner's ability to understand what's going on externally, and do they have the resources and the experience to make the right decisions to adapt to ensure that they can be a viable business.

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