Do You Know The 5 C’s of Credit?
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THE ESSENTIAL FIVE C’S
When you’re considering a major financial loan or asset based financing, it’s important that you take all of the mitigating factors into consideration. It’s every bit as important that you make a determination while assessing each of these criteria equally, as they should all equally influence your decision.
The FIVE C’s of Credit:
If you’re in a position to review a borrower in consideration for asset-based financing or a major capital loan, you owe it to yourself to check the borrower out thoroughly. Beyond the basics, the 5 C’s cover everything you need to consider when you’re determining whether a borrower meets your criteria. It’s as simple as:
- Character
- Conditions
- Capital
- Collateral
- Capacity
Gambling with your hard-earned money — or your company’s — simply doesn’t make sense. It’s important to investigate a borrower fully and thoroughly before you come to an agreement about a capital loan or another asset-based financing decision. It’s crucial that they prove to you what they are willing to do in order to make you rest easy about their loan.
Don’t get caught in a bind with a borrower trying to pull the wool over your eyes. Insist on fully investigating the 5 C’s so that you can rest assured your loan is financing exactly what it’s supposed to. Good business begets good business, so put the 5 C’s into use in your business and lend smarter on every transaction.