When you go to a bank or lending institution, there are five important things to take into consideration before approving a loan. These "5 C" applies to loans to both personal and professional. As the bank or credit is in business to make money, they take these 5 things seriously and want to be ready before applying for a business loan. The C 5 in no particular order, capital, collateral, conditions, character and ability. Here we will deal specifically how they apply to a business loan.

The capital is the money you personally have invested or will invest in the company. When applying for a business loan possible lender wants to see what kind of risk you are willing to do to see the company succeed. Besides that I have personally invested in the company most likely to work harder to ensure your business a success. If you are not ready or willing to make a significant investment in the financial sector, the more likely the lender will not be ready to take a risk, either. If your company is already in use, you will be asked to provide personal and business records showing the details of the company, including tax records, accounts payable and receivable.

The warranties are personal property or business and are willing to put as collateral in case the company can not repay the loan. The bank wants to know that a second source of repayment. Equipment, buildings, accounts receivable, and in some cases, shares are considered as possible sources of repayment of commercial loans, the bank can only sell for cash. Business and personal assets can be a source of collateral for business loans. Warranty should not be confused with a guarantee. A warranty is when someone signs a guarantee document promising to pay the loan if you can not. Some lenders may require collateral security and as collateral for a business loan.

Terms refer to the loan company. The money will be used for working capital, additional equipment or inventory? Other terms and conditions of the lender is considering the economy and the environment are not just business, but also in businesses that may affect your business (or your suppliers and service companies involved).

Character is doing an impression of each creditor. The lender or the amount that can be trusted to repay the business loan, if granted. Some things the lender might ask are the training, experience in business and your industry. More than likely ask for a reference for you and your background and experience, employees can also be considered.

Ability to repay business loans are the most important of these five factors. The prospective lender will want to know exactly how you intend to repay the loan. Lenders consider cash flow from business at the time of repayment, and the probability of successful repayment of the loan. Payment history on other credit relationships, personal and business, is considered an indicator of future payment performance. A company must be able to pay all his debts, not just in its payments when due. Candidates are generally required to report on their income will become cash and when expenses are paid. This ratio is usually in the form of a cash flow projection, broken down on a monthly basis, covering the first annual period after the loan is received.