Creditworthiness has never been more important than it is today. In December of 1997, I wrote an article in "Dance Teacher Now" magazine, that highlighted the 5 C's - the five areas of concern regarding Creditworthiness - here are the highlights:
Capacity to repay is the most critical of these five factors. Lenders are in business to see that loans are repaid with interest in a timely manner.
Character is actually your payment history on existing credit relationships - both personal and commercial.
Capital is the money you personally have invested in your business, and it is an indication of how much you have a risk should the business fail.
Collateral or guarantees are additional forms of security you can provide the lender. Prospective lenders want to know about your contingent sources of revenue should normal revenues decline, for whatever reason.
Conditions to a loan focus on the intended purpose of the money advanced. Is it for current operations, for expansion, or for a new building or equipment? The lender will need to understand these conditions in order to be able to allocate loan funds to you.
We can look at a lot of other relevant factors, and at these factors in more detail, but an initial focus on these five will give you a quick idea of whether applying for a loan from a financial institution is likely to be successful for you.
Dr. Bill - I love to share. I hope you do to! ;-)