Commercial Loan Borrowers - Is There Such a Thing As a Perfect One?

Each borrower has their own set of risks and the way banks look at these risks is unique to each bank.  Not only is it unique to each bank but also unique to each lender, underwriter, credit officer, senior credit officer, loan reviewer, regulator, and the list goes on.

When dealing with lending out someone else's money, it is guaranteed that each of the borrower's risks is scrutinized differently by each person who has a stake in that credit (or loan/exposure).  There are guidelines set by each institution that "guides" each individuals thought process about the loan request (typically called a credit policy), however, each individual underwriter/reviewer will have their own take on what they feel is critical and subject to further analysis.

Each borrower's loan request is put through a subjective evaluation before money is lent.  The key word here is subjective.  What is the appropriate debt service coverage, loan to value, debt to tangible net worth, structure, covenant, etc.?  All subjective - granted there are best practices, but nonetheless, subjective.  Subject to industry comparison, subject to regulation, subject to individual thought process, etc.  Once you understand this, you understand why there may never be a perfect borrower.