What is often required by lenders when a business seeks debt financing?

When a business seeks debt financing, lenders typically require security for the loan as it serves as collateral that protects the lender’s interests. This means that the lender can claim the asset if the borrower defaults on the loan. Security can come in various forms, including property, equipment, inventory, or other valuable assets that can be liquidated in case of non-payment. By requiring security, lenders reduce their risk and make the process of granting loans more favorable for both parties.

Tax documentation may be of interest to lenders as it provides insight into the business's financial health and history. Personal guarantees can also be requested, especially in smaller loans or startups where the business may not have substantial assets. However, these are not universally required nor do they serve the same purpose as security. Friendship references do not hold any relevance in the context of financial transactions. Instead, lenders focus on tangible security to ensure they have a way to recover their funds if necessary.