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    ENTREPRENEURSHIP 5 C'S

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    khizar naseem
    The document discusses the 5 C's of Credit that lenders evaluate when deciding whether to approve a loan for a business venture. The 5 C's are: [1] Character - whether the borrower has a good reputation and will make loan repayments a priority; [2] Capacity - if the business will generate enough cash flow for the borrower to repay the loan; [3] Collateral - whether assets are available if the loan defaults; [4] Conditions - factors outside the borrower's control like the economy; and [5] Capital - demonstrating the borrower's own financial commitment by contributing as much of their own money as possible to the venture. Meeting the 5 C criteria helps convince lenders of

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    ENTREPRENEURSHIP 5 C'S

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    khizar naseem
    18 views9 pages
    The document discusses the 5 C's of Credit that lenders evaluate when deciding whether to approve a loan for a business venture. The 5 C's are: [1] Character - whether the borrower has a good reputation and will make loan repayments a priority; [2] Capacity - if the business will generate enough cash flow for the borrower to repay the loan; [3] Collateral - whether assets are available if the loan defaults; [4] Conditions - factors outside the borrower's control like the economy; and [5] Capital - demonstrating the borrower's own financial commitment by contributing as much of their own money as possible to the venture. Meeting the 5 C criteria helps convince lenders of

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    ENTREPRENEURSHIP 5 c'S

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    The document discusses the 5 C's of Credit that lenders evaluate when deciding whether to approve a loan for a business venture. The 5 C's are: [1] Character - whether the borrower has a good reputation and will make loan repayments a priority; [2] Capacity - if the business will generate enough cash flow for the borrower to repay the loan; [3] Collateral - whether assets are available if the loan defaults; [4] Conditions - factors outside the borrower's control like the economy; and [5] Capital - demonstrating the borrower's own financial commitment by contributing as much of their own money as possible to the venture. Meeting the 5 C criteria helps convince lenders of

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    18 views9 pages

    ENTREPRENEURSHIP 5 C'S

    Uploaded by

    khizar naseem
    The document discusses the 5 C's of Credit that lenders evaluate when deciding whether to approve a loan for a business venture. The 5 C's are: [1] Character - whether the borrower has a good reputation and will make loan repayments a priority; [2] Capacity - if the business will generate enough cash flow for the borrower to repay the loan; [3] Collateral - whether assets are available if the loan defaults; [4] Conditions - factors outside the borrower's control like the economy; and [5] Capital - demonstrating the borrower's own financial commitment by contributing as much of their own money as possible to the venture. Meeting the 5 C criteria helps convince lenders of

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    ENTREPRENEURSHIP

    Gulraiz Khan
    SE120182016
    BSSE (A)
    TOPIC:

    “THE 5 C’s of Credit”


    5 C's of Credit
    1. Character
    2. Capacity
    3. Collateral
    4. Conditions
    5. Capital
    CHARACTER
    To the potential lender, character means that you will
    make every possible effort to repay the loan. You
    must be a good manager, be honest, and have a good
    reputation as perceived by the lender. Therefore, it is
    important to be honest about your personal strengths
    and weaknesses.
    CAPACITY
    Will your new business generate the cash flow to
    repay the loan? Do you have the capacity to repay the
    loan? Lenders not only look at the business’s
    financial projections, but also your ability to repay
    the loan if the business does not work out as planned.
    Do you have outside income (investments, a working
    spouse)? Would you be able to return to your present
    job? Do you have other skills that could produce
    income? Be prepared to provide solid answers to
    these questions and be able to offer real evidence.
    COLLATERAL
    In case the new venture is not successful and the lender must
    foreclose, will the collateral cover the loan? Is the collateral
    adequately insured? Is the collateral marketable? In the past,
    a cosigner (someone who signs the loan along with you) has
    been used as collateral for many small business ventures.
    However, banks and traditional lending institutions now look
    less favorably at cosigners as collateral. Collecting from co-
    signers is becoming increasingly hard, and bankers then lose
    not one, but two customers. You can use your home or other
    real estate, cash value of life insurance policies or marketable
    securities as collateral for business loans. However, before
    borrowing against these items, consider carefully the
    consequences of the worst possible situation in your business
    if you are forced to liquidate.
    CONDITIONS
    Conditions are those factors over which you have little or
    no control. The lender will look at the conditions, or
    trends, in the overall business economy, the trends in your
    community, the seasonal character of your business, and
    the nature of your product or service. Other factors
    entering the decision-making process are whether the
    lender may have already invested in a competing business
    and how much competition there is in your market. Be
    prepared to tell the lender how you plan to deal with these
    conditions, how you have assessed the market, and how
    your business will weather economic changes.
    CAPITAL
    Knowledgeable lenders will not put money into a
    new business unless they have concrete evidence
    that you have personally made a sizable financial
    commitment to the business. They know from
    experience that if the venture turns bad it will be
    easier for you to back out if you do not have your
    own money at risk. From your personal resources,
    you should try to provide as much of the needed
    capital as you can afford to put at risk
    THANKYOU

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