As many of you know the current economic conditions aren’t very friendly to the small business owner.  Lending is tight, credit cards are hard to find and people just aren’t spending money.  There is however some best practices on how to increase your chances of receiving funding even in the worst of economies.  I would like to introduce the 5 C’s of credit.  What many business owners fail to realize is our country has seen these current lending criteria’s before.  Pre-subprime which would probably be pre-1997 the lending criteria was virtually the same.  You needed good numbers, decent collateral, and a strong business plan.  The 5 C’s of credit might be able to help.

Character

What does your company stand for?  Does your management team have a reputation in the community, industry, or workplace?  Do you promote good customer service and do your customers know that?  Lenders want to see that you have created a positive culture.

Capacity
How much can your company take on as far as financial responsibilities such as debt?  Lenders want to know the point at which the boat no longer floats if too much debt is on the books.

Capital

Do you have a 401K or some sort of pension?  Do you have a savings account?  If so have you tapped that cash to grow or sustain your business?  Lenders want to see if you are personally invested in your own company before they give you their money.  If you won’t belly up why should the lenders?

Collateral
What are some of the assets the company owns or you personally own?  Lenders especially today require some sort of asset they can take if you don’t pay off the loan that they can convert to cash.  Try to put up company owned assets before you go to your home or your cars etc.

Conditions
Lenders want to know how your particular industry is handling the current economy.  Is it up or down or flat?  If so what are you doing to stand out to make a difference?