If you intent to construct a home or a commercial building, you are probably wondering how you will finance your project. Getting a loan is one of the best options. Borrowing allows you to use someone else’s money now, to start your construction in Kenya and pay for it later with interest. It would be best to finance your project from your savings but it is not always possible.
Your ability to qualify for a loan is all dependent on, first and foremost you as a person. This is one instance where to qualify you need to put your best foot forward and assure the lender that you can be trusted with their money. The lender will depend a lot on their first impression of you to decide if they like you or not. They will then dig into your past and present, trying to figure out if you are clean. All your dealings must be above board. Here is where your reputation will precede you.
Capacity refers to your ability to actually repay or service the loan. This will depend on your sources of income compared to your current and future financial obligations. The lender will also analyze any other loans you are currently servicing as well as alternatives available should your main source of income be cut for any reason.
The lender will be very keen to know exactly what your worth is. They will dig deep to find out what your obligations are and compare that to your income. For business owners seeking finances, the biggest consideration that is made is how much you have invested in your business. Those who have invested more work harder and are more likely to succeed and make more money. Those who have not invested a lot are more likely to fail and give up on their business when tough times come.
Collateral is the fall back position for any lender. A lender needs to know that if for any reason you are unable to service your loan then they can easily recover their money. You can used your assets as security and in case of default, the lender will sell the asset and recover their money. Some lenders may require a third party guarantor in addition to collateral for added security.
You may have all your ducks in a row, with everything checking out about you but there are some external forces that can knock you out of consideration by a lender. The business environment in your sector as well as other sectors can give any lender doubts about lending to you. This is simply because if your sector is affected negatively directly or indirectly it will affect you.
These are the key factors that a lender will analyze in order to ascertain if you qualify for a loan, and if you do, how much you can access. Before seeking financing, you can do a self analysis of the above factors and ensure that your score is high. This will ensure that you qualify for the construction in Kenya loan that you are applying for.
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