Many people have the mistaken belief that if they need to borrow money, then it is considered income. This is not necessarily true when borrowing from a bank or other financial institution. The fact is that the only time that your income is considered income is if you are getting an advance on the money that you are borrowing.
If you are getting a business loan, then the interest that you will be paying back is considered income to the bank. If you are asking a bank for a home equity loan, then the amount of the loan that you are getting is considered your income. It does not matter how much money you have in savings or checking accounts, these are not income loans. When you are applying for a home equity loan, then the bank is going to want to know what you are going to be using the money for. They are going to need to know what kind of mortgage payment that you can afford and how much of your income is going to go towards your down payment and principle.
When a business loan is being taken out for equipment, furniture or supplies, then it is income. When you are getting credit card debt extensions or lines of credit, the amounts that are being borrowed are also considered income. When a person takes out a new auto loan, the payment that they are making each month is considered income. It does not matter if you are able to make the monthly payments because you have chosen to buy an expensive car or not.
Because of this, when you are looking to get a loan to assist with your business venture, it is important to know what the parameters of the loan are. Knowing what to expect will be very helpful in making sure that the loan that you are getting is going to be an acceptable amount of money that you will be able to pay back. It will also be very helpful if you can get a quote from several lenders so that you can compare them. Lenders want to have as many business loans approved as possible. You may even find that some lenders will approve the loan without you needing to provide paperwork as long as you have a decent credit history and you are able to show that you will be able to repay the loan.
The lender that approves your loan needs to be comfortable that you can pay it back. This means that they need to be confident in their decision. You will need to provide them with certain information which will include the purpose of your loan as well as your personal and professional information. You should also include information on where you plan on keeping your business.
When a lender is considering whether or not a business loan is considered income, the loan officer is required to look at your debt to income ratio. They will look at the amount of your assets versus your debt. They will also look at your . . . . . . credit history and what your monthly expenses are.
This is a very important part of getting a business loan. If your debts are greater than your assets then the loan you get will be considered an unsecured loan. This means that if you can't pay back the loan you applied for then the company has nothing to go on in order to recover their investment. The only way to recover their investment is to take a law suit against you.
While it is true that some lenders will consider income when they are doing a credit check on you, it is still not a good idea to confirm this information yourself. It is better to be safe than sorry. Once you get your business loan you can usually get this done online or over the phone. This will make it easier on you and allow the lender to verify the information you reported.