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lending money
personal element
arduous task
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5 Cs Business Financiers Use Before Lending Money To Companies
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Perhaps you are starting a small venture or maybe you are wanting to grow, invest in new plant or research a new brand. It is likely you will require more working capital and a business loan could be {a route to consider.

Requesting a loan can be an arduous task for a micro business but a key thing to remember is lenders and financiers are often more sympathetic to a well produced funding application than a verbal or sketchily written one.

The bank wants to be happy that you have a business plan and are operating to it; you have a vision for where the firm is aiming and that importantly you know how the loan is going to be repaid.

As Well as providing core information in the submission such as the type of your company, the amount of money, the period of the borrowing and etc, it is necessary that you understand the risks that go with the application.

There are several risk factors to take into account including: the risks of exceeding the budget, loss of supply of materials necessary for production, price rises, weaker demand for and price of service, governmental influences and the state of the economy. You need to acknowledge each risk factor and discuss how the risks are going to be overcome.

Check that you research just what the lender or finance company will want to see before submitting your application. To support a positive outcome you have to make a complete and accurate submission that covers all the relevant questions the financier will want confirmed.

Five Cs of Lending Bankers use a concept they call Five Cs of Lending to ascertain whether they will fund an applicant. They are:

  • Character - what is the personal element of the company?
  • Capacity - have they got the ability to repay their loan?
  • Collateral - the type of security?
  • Conditions - what is the market place doing in that particular industry or location?
  • Capital - what is the present financial position of the applicant looking at the balance sheet?

In conclusion Lenders need to lend money to businesses - that is where they make an income. So they will be willing to listen if your company has a good, professionally application. In order to secure the business loan you looking for your growth, you need to bear in mind that particular word - business. The banks will be considering you as a business therefore is vital that you behave and show yourself as a business. It is not luck that the first of the Five Cs is character. Investors invest in people not ideas.

If you are having difficulties creating the application a strategic plan adviser maight bea ble to help you.


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