International Business news - Good cash flow helps borrowers get loans

Good cash flow or ability to pay, and not collateral is what most banks seek from borrowers because the first is more important in stopping non-performing loans from getting bloated, the Bangko Sentral ng Pilipinas  (BSP) said.
According to the BSP, it is a normal procedure that banks practice strict underwriting process before approving loans to individuals or corporations to assure repayment.
In layman’s parlance, deputy governor for supervision and examination sector Nestor Espenilla described cash flow as the loan seeker’s ability to pay debt on time based on maturity.
“It’s the business of banks to lend. They will lend if they are satisfied that they will be repaid. So they lend to people with good cash flow from business or employment,” Espenilla explained to The Daily Tribune.
A source at the BSP said denying loan applicants are a prerogative of banks.
In this case, many resort to so-called “loan sharks” that lend money with interest of 20 to 25 percent.
The problem with loan sharks is they are not banks. They are people who go to different places to lend money.