4. What if the borrower cannot "stand on its own?"

In the alternative, if the borrowing entity is not strong enough to stand on its own, then the lender will likely require guaranties and/or other support or enhancements for securing the project. Examples of "not strong enough" include:

  • If it is a brand-new entity.
  • If it has too few years in business.
  • If there are too few physician owners.
  • If there is not enough cash equity in the project.

Examples of other support and enhancements include, beside guaranties, collateralizing the guaranties (as discussed previously), requiring a stand-by letter of credit (to be discussed), crosscollateralizing the loan with others that the lender may have made to you or to directly related parties to you in the past, and other creative ways designed to tie you closer to the project and thereby ensuring that your interests are directly aligned with those of the lender.

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