The 5 C’s of Credit are used by lenders to determine whether they’ll give you a business loan. Learn them here, and then use your newfound knowledge to secure the financing you need.
- Capacity – This is your ability to repay the loan. The lender determines what your capacity is by comparing your business’s cash flow to the amount of recurring debt you already have.
- Capital – The more capital you can put towards your investment, the more appealing you are to lenders. A large contribution on your part tells them you’re serious about repaying the loan since you have skin in the game.
- Collateral – Many lenders require you to put up some property or a large asset as collateral in case you default on the loan. This will vary depending on the type of business loan you choose to apply for.
- Conditions – Lenders often want to know how you’ll use your loan to help them identify any potential risks. Will you purchase equipment, replenish inventory, or hire on more staff? Be prepared to provide an overview of your plans.
- Character – Believe it or not, who you are as a person is part of the loan application process. Lenders prefer to work with business owners who are honest, trustworthy, and reliable. Be prepared to present business and personal references who can speak to your character.
Do you have answers to all 5 C’s? Then it’s time to get financing. Use our simple application to gain access to business loan options from 75+ lenders.
