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    Question

    W hen extending credit, which of the following will not

    be a primary factor to be considered by the bank/lender, as per the p rinciples of l ending ?  
    A The purpose of the loan Correct Answer Incorrect Answer
    B Security offered for the loan Correct Answer Incorrect Answer
    C The age of the business owner Correct Answer Incorrect Answer
    D The liquidity of the collateral Correct Answer Incorrect Answer
    E All are primary factors Correct Answer Incorrect Answer

    Solution

    The age of the business owner is not a primary factor in granting loans or extending credit . The most important factors are the purpose of the loan, the security provided, diversification of risks, and the liquidity of the loan, which ensure the loan is both safe and viable .   While the age of the business owner is not relevant, the experience and professional background of the business owner is considered as part of the risk assessment while giving loan.  

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