20 Nov The Five Cs in Business Credit
There are five Cs in business credit, and they are:
1. Character 2. Capacity 3. Capital 4. Conditions 5. Collateral
Character is what defines you. It’s about your stability, personal history and level of reliability. This particular variable is more subjective which is why it is more advisable to do your business with a bank where you’re familiar with the staff. When trying to determine your character, your education, work history, personal credit history and personal income, will come into play. This is one aspect of business credit that lays emphases on personal relationship.
Capacity is about the ability of a business to pay back their loan in line with the agreed terms. Factors like payment history, cash flow as well as the resources and assets of the person providing the personal guarantee goes a long way in determining if you’re capable of paying back the loan.
Capital has to do with the amount you’ve being able to invest in your business. Regardless of the type of loan you seek, lenders are always interested in knowing how invested you are in your business. Potential lenders are more impressed where you invest more of your personal money in your business; it shows how confident you are in the business.
“Conditions” could mean a number of things. Conditions can sometimes be out of the control of the borrower. For instance, the economy could play a huge role in whether or not you secure approval for your loan. The industry and its economic strength and the reason for the loan, are some other factors that might be considered.
Collateral is something you offer as security for your loan. It could be anything, from homes, to equipment, to inventory. Sometimes, collateral makes it easier to secure approval for loans and there are loans that actually require it. In certain cases, the more collateral you have, the more your chances of getting approval.
If you’re in a struggling industry where businesses are finding it hard to make ends meet, it could have a negative effect on your ability to gain approval for your loan. Loans for risky and unproven ventures are less likely to gain approval.
About the Author
Jenella J. Brown is currently the CEO and a FCRA Board Certified Credit Consultant at A Good Name Credit Solutions & Tax Service, LLC. At A Good Name Credit Solutions, she specializes in raising credit scores, income taxes, tax resolutions, and helping business owners establish excellent business credit scores and then leverage those scores to access cash and credit for their businesses.
Ms. Brown is the author of the book “A Good Name Credit Solutions” which can be purchased on amazon. The book is a personal guide designed to give the reader a step-by-step process of understanding how the credit system works and how to restore their own credit. Ms. Brown is also the mastermind behind the release of the exclusive Business Funding Suite. The Business Credit and Funding Suite is the leading business cash and credit access system in the world today. For more information on building business credit, business loans, or tax issues or credit restoration; visit the website at: www.agoodnamecredit.com for a FREE consultation.