These are the Five C's of Credit

1. Character
• What is it: It is the credibility of a person that is getting the loan.
• Why it is done: The lender wants to know the borrower, his history,
his past credit data, his reputation and his designation (PEP).
• How to assess: It is assessed by credit score, references, public
opinion, ECIB report.
• How to Improve: You need to clear all the past debts and clean your
records. Have a good credibility, good relations in the
market/industry, being professional.

2. Capacity/cashflow
• It is the ability of borrower that he can generate enough to repay the
debt.
• Banks want to understand the capability of the borrower to invest
and then generate cashflows that he will be able to pay back the
debt.
• It can be assessed by cashflow statement, debt ratios, financial
statements, DTI, DSCR.
• Increase your sales, improve your performances, show the previous
success on investment, show your cashflows.

3. Capital
• It is the amount you and your partner have invested in the business.
• Bank want you to have interest in your business. If you have invested
a good amount, it depicts that you are serious and if defaults banks
will not suffers.
• Bank will assess your investments, your past decisions, sales, success
rate.
• You can improve your sales through smart decisions, increase your
capital investments.
• If you have no investments, focus on the rest of 4 C’s.

4. Conditions
• It is the conditions of the debts and economic/industry conditions.
• Banks wants to invest in a safe sector having their policies just to
make the borrower assure that he can pay back.
• Bank will place a interest and principal amount of the repayments,
economic conditions will be assessed by index analysis, overall GDP,
further economic parameters.
• You can’t control the economy but can plan better to cash out the
situations. Take risk-free decisions, ensure a good credit history,
assure them about repayments through smart decisions.

5. Collateral
• It is the backup that one gives to the bank for the a loan security.
• Banks want to have something that can be cashed out if in-case you
goes bankrupt.
• Fixed asset i.e. property, car, machinery, or Current assets like account
receivables, running finances, inventory can be kept as collateral.
• Picking the right type of bank and having a stable structure can help
you save your assets. Policies of return if you pay the debts,
incorporating your business can help you save your assets if
bankruptcy happens.