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What Bankers Look For the Most – The five C’s of Credit (and one M)

  • Character – Customer’s willingness and determination to meet a loan obligation.
  • Capacity – Customer’s ability to generate sufficient cash flow to repay debt.
    • Historical financial results.
    • Projected financial results
  • Capital – Availability of resources to operate a company
    • Amount of equity capital the owners have invested in the business
    • How effectively capital is employed.
  • Conditions – External variables, such as the state of the industry or economy.
  • Collateral – Secondary source of repayment if cash repayment does not materialize in the normal operating cycle of the company.
  • Management – Ability to handle and oversee all that is involved in operating a successful company.
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