Question

A $40,000 LOC application is received from a SEL lender. The cash flow budget must be based on an average of the last five years' financials and production history.

a) True
b) False

Answer 1

The accuracy of the statement depends on specific lender guidelines or financial market practices; while lenders often require financial history for a loan application, the exact time frame required can differ.

Step-by-step explanation:

The question relates to whether a cash flow budget for a $40,000 LOC (Line of Credit) application from a SEL (Simplified Employee Pension) lender must be based on an average of the last five years' financials and production history. The statement presented in the question is typically not a universally true requirement and may vary depending on the lender's policies or financial regulations. It is important to consult specific lender guidelines or financial market practices to determine the correct answer. In general, lenders may request financial history and production records to assess the creditworthiness of a borrower, but the exact time frame required can differ.