The 5 Cs of Credit

Running a small business inevitably has its challenges; from cash flow to market stability, almost nothing is guaranteed. Whether starting a new venture, expanding into new areas or replacing old equipment, funding can be necessary to simply stay afloat.

The good thing is that loan applications generally look for the same criteria to determine how likely a business is to repay its loans with interest. This is where the 5 Cs of credit come in. Collectively, they are reliable and well-known metrics that blend both quantitative and qualitative aspects so borrowers can gauge how attractive their application is to lenders.

The 5 Cs of credit include character, capacity, capital, conditions and collateral. While generally agreed upon, each part may carry different weight across lenders and for different reasons. To help you prepare best for all lenders, make sure you understand the five areas of small business credit. Small business owners who understand their business credit score are 41% more likely to be approved for a bank loan! 1

The information in this article is provided for education and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness or fitness for any particular purpose. The information in this article is not intended to be and does not constitute financial or any other advice. The information in this article is general in nature and is not specific to you the user or anyone else.

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