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This financial tool analyzes banking records to estimate borrowing capacity. For example, it assesses income and spending patterns over a specific period, typically 12 to 24 months, to determine eligibility for loans, particularly those aimed at self-employed individuals or business owners. This approach offers an alternative to traditional loan underwriting based primarily on tax returns and pay stubs.

Analyzing banking records provides a granular view of financial health, offering a more comprehensive picture than traditional methods. This is particularly beneficial for individuals with fluctuating income streams. Historically, securing loans required extensive documentation and rigid adherence to traditional employment models. This tool represents a more inclusive approach, opening opportunities for entrepreneurs and freelancers previously underserved by conventional lending practices. It allows lenders to assess risk more accurately based on real-time financial behavior.

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