The term "financially viable" refers to the ability of an applicant to reliably repay a loan. This means that there is a reasonable expectation that the applicant can make all scheduled payments of principal and interest as they come due. Additionally, the applicant should have a positive net present value, which takes into account all current and future costs associated with the loan.
This term is commonly used in financial and legal contexts, particularly in loan agreements and funding applications. It is significant in areas such as corporate finance, real estate, and government funding programs. Understanding financial viability is crucial for both lenders and borrowers to ensure that loans are granted to applicants who can meet their repayment obligations.
Here are a couple of examples of abatement:
Example 1: A small business applies for a loan to expand operations. The lender assesses the business's financial statements and forecasts to determine if it is financially viable to repay the loan.
Example 2: A nonprofit organization seeks funding for a community project. It must demonstrate financial viability by showing that it can cover project costs and repay any loans taken for the initiative (hypothetical example).
| Term | Definition | Difference |
|---|---|---|
| Creditworthy | The likelihood of a borrower repaying a loan based on credit history. | Financial viability focuses more on future cash flow and costs, while creditworthiness is based on past behavior. |
| Solvent | The ability to meet long-term financial obligations. | Financial viability is a broader term that includes future projections, while solvency is a snapshot of current financial health. |
If you are seeking a loan or funding, ensure that you have a clear understanding of your financial situation. Gather your financial statements, project future cash flows, and consider all associated costs. You can also explore US Legal Forms for templates that can assist you in preparing necessary documents. If your situation is complex, consider consulting a legal professional for tailored advice.
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Being financially viable means having the ability to repay debts and maintain positive cash flow.