{"id":333,"date":"2013-11-07T15:02:54","date_gmt":"2013-11-07T22:02:54","guid":{"rendered":"https:\/\/www.jacksonwhitelaw.com\/az-small-business-representation\/?p=333"},"modified":"2023-07-11T10:11:47","modified_gmt":"2023-07-11T17:11:47","slug":"the-5-cs-of-small-business-lending","status":"publish","type":"post","link":"https:\/\/www.jacksonwhitelaw.com\/az-small-business-representation\/blog\/the-5-cs-of-small-business-lending\/","title":{"rendered":"The 5 C\u2019s of Small Business Lending"},"content":{"rendered":"

Starting a small business can be a daunting a task.\u00a0 Most small business owners need a small business loan to get started.\u00a0 Traditionally most owners went to banks, but it\u2019s reported that 59 percent of small business owners look at the bank, but only 27 percent end up finding financing there.\u00a0 Some sources say the percentage of owners who receive financing at a local bank is even smaller, more like 10 percent.\u00a0 Banks are becoming more frugal in lending to small business owners, taking their risks on larger companies with history of sales.<\/p>\n

Heading into the bank with knowledge of what you are going to be asked is the best way to be prepare yourself for obtaining a loan.\u00a0 Think of it as a teacher going over the answers to a test, before you are given the test.\u00a0 Here are the five C\u2019s, what your banker wants to know about you and your business:<\/p>\n

Character<\/b>: This is an important part of how the bank will evaluate potential customers.\u00a0 Although credit score is a major factor, character also plays into an application.\u00a0 Banks want to see a good management team, and know that even though the applicant may not have perfect credit they still believe in them enough to supply you with financing.<\/p>\n

Credit Score<\/b>: Although different lenders are willing to work with owners with different credit scores, most lenders do have a threshold they won\u2019t go below.\u00a0 Lenders tend to describe your credit score as a measure of your willingness and commitment to meet your financial obligations.\u00a0 Your credit score is critically important, so when you meet with a lender you should know your score and be ready to explain anything negative on your report.<\/p>\n

Capacity<\/b>: This is the monthly or annual revenues question. No lender is interested in giving a loan to someone who has no means to repay it. What\u2019s more, even if you have great credit and are in an idea-stage or early-stage startup and have no revenues, it\u2019s probably not the best time to be looking for financing.<\/p>\n

Capital<\/b>: This is the cash the banker expects you to have on hand before you are offered a loan. It\u2019s important to remember that bankers are highly risk averse and want to make sure borrowers have a little bit of skin in the game. From their perspective, the thought is a little skin in the game will make it harder to walk away. It makes sense too, but we all know your blood, sweat, and tears are a pretty substantial investment too. Having some cash on hand for day-to-day cashflow and maybe a little set aside for a rainy day tells the lender the business loan you are looking for isn\u2019t a last-ditch effort to keep your company alive for the next few months while your business continues to falter.<\/p>\n

Collateral<\/b>: Banks and other traditional lenders consider assets like real estate or capital equipment as collateral. Alternative lenders might consider your accounts receivable or monthly credit card receipts as collateral.<\/p>\n

If you are a small business owner and are looking for legal representation look no further! \u00a0Call JacksonWhite’s Small Business Law Team at (480) 464-1111<\/a> to discuss your case today.<\/p>\n","protected":false},"excerpt":{"rendered":"

Starting a small business can be a daunting a task.\u00a0 Most small business owners need a small business loan to get started.\u00a0 Traditionally most owners went to banks, but it\u2019s reported that 59 percent of small business owners look at the bank, but only 27 percent end up finding financing there.\u00a0 Some sources say the […]<\/p>\n","protected":false},"author":21,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"site-sidebar-layout":"default","site-content-layout":"default","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"default","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[5],"tags":[],"acf":[],"yoast_head":"\nThe 5 C\u2019s of Small Business Lending | JacksonWhite Law<\/title>\n<meta name=\"description\" content=\"Starting a small business can be a daunting a task. 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