Avatar's Blog
» Income to Expense Ratios
Avatar Financial Group funds loans that make sense for the borrower and make sense for the lender. Therefore, they look for signs that the borrower is able to afford the loan and prosper, as well as pay back the loan in a timely manner.
Avatar looks at the P&Ls for the property / business / borrower to see that the income to expense ratio is at least 1.2 : 1. This means that the borrower is bringing in at least 1.2 times the amount s/he must spend on expenses. This buffer says that the borrower is putting a few dollars into pocket each month and, in the event of a "bumo in the road", will be able to get over the hurdle, rather than fold under the pressure. Avatar wants to be a responsible lender, not a property owner or real estate seller. Avatar funds loans that make sense for all parties concerned.
