Every business owner always upholds the responsibility of managing their business by treating the employee and customers right. Even at that, they still have the responsibility of managing and maintaining the business’s financial status to reach its peak. But when things go wrong leading to bankruptcy, the business owner will be left with the option of borrowing money.
Every business, whether small or large, often encounter a financial problem but with the incredible option of borrowing money. They tend to turn the situation around with the help of the loan offer from a lending company.
The professional in lending companies that have the ability to make the final decision about your eligibility of loan uses the Five Cs to determine whether you are creditworthy.
With the help of Five Cs, the professionals from the lending company will access all of your financial histories. Every business owner tends to keep their Five Cs in a positive record with the aim of getting a loan success in the future. Here are the Five Cs to maintain in the aim of gaining a loan success in the future;
The capital is the total of what you own, whether it’s your business or property. The total net worth of what you have and your own determines your wealth. Business owners are advised to focus on improving their capital before think about applying for a loan. Lending companies access your money to learn the best loan offer for you because they can only give you what you can be able to pay back.
The capacity of your income determines whether you can be able to pay back any loan offer given to you. It all depends on your current income rate from your business, which will determine the amount of loan offer you will receive.
Lenders will always access your capacity from your debit load and bank statements to determine what you will be able to repay. It doesn’t end on the lending company approving the loan offer, which you seek because all the stress lies through the repayment process.
The lender needs to check your capacity, determining that you will be able to repay the loan granted through the estimated time while still saving some money from your income. The lower the ratio of debt you have, the more confident the lender will be in granting you a massive loan offer.
Having collateral is very important when applying for a loan because lending companies often value it. With you having a valuable property as collateral, it will show the lending company that you are serious about your loan offer.
Depending on the worth of the property used as collateral, you are likely to get a good loan offer with fast approval. Using your assets as collateral won’t make your life miserable if you have a steady income that can repay the loan offer you want.
The condition can be the state of your business, company, or property value will help the lender determine the appropriate loan offer for you. Your business is likely to affect the repayment of the loan offer when due. They will need to evaluate how you can handle any problem that affects your business while checking your income value.
Your character matters depending on how you behave during business activities or during the meeting with the lending company. They will check your credit history as well as an attitude toward other lending companies that you have used their service before.
During this period, they might request some of your details, ranging from your social security number (SSN), date of birth, and permanent residential address. All information will be filed accordingly while using the provide information for verification.
The lending company will likely contact other lending companies that have already granted you a loan offer before for verification of your character. They might even go further to obtain a report from the credit bureau as well as your current credit score.
Most of the lending companies out there combine the Five Cs with other evaluation processes from their end in making the process of loan offer a little bit easy. The new factors which they might use in evaluating your creditworthy might be based on your credit used and credit available.
Once the process is joined with the Five Cs, the lender will have a proper evaluation of your business condition and financial status, which will determine how you will pay back in the future.