Thinking about getting a small business loan? Familiarizing yourself with the five C’s of credit can help you understand the factors that lenders consider. Unlike a personal loan which examines individual credit history, business loans look at the five important characteristics to determine your creditworthiness.
What are the five C’s of credit?
Why Are The Five C’s Important?
Knowing the five C’s before you apply for a business loan will help you anticipate obstacles and make necessary changes or improvements before you start the loan application process.
The five C’s can help you assess both your strengths and weaknesses as a company. They may also give you important information that will help you approach the right lender.
Savvy investors will also consider the five C’s before putting their capital into a business. Knowing how your business measures up will better prepare you to get the funding you need.
5 Questions to Ask Before Applying For a Business Loan
- Am I Familiar with the 5 C’s of Credit?
- Is my business in compliance with all local, state and federal laws and regulations?
- Have I researched the current economic conditions in my industry?
- Is my business model viable for the growth I hope to achieve?
- What are my strengths and weaknesses as a business?
You know your small business better than anyone else. So you are in the best position to root out any weaknesses or shore up any strengths that might help you make a case to a prospective lender or investor.