The 5 C’s of lending: what to know before asking for capital
INDIANAPOLIS (WISH) Before taking the steps to secure funding on a new business, there are a few important things to consider. Matthew Murphy III, Founder of Emboss Partners, talks about what entrepreneurs should do before asking for capital.
Murphy recommends networking and familiarizing yourself with a banker before you ask for their services. Business owners are really selling themselves and their ability to drive results, so getting to know other businesspeople is a good precedent for the lending process.
There are 5 C’s of lending that bankers consider when you present them with your business.
- Character: personality, reputation, accountability
- Conditions: the conditions of the business’ industry
- Cash flow: measurable, repeatable, sustainable cash flow
- Collateral: secondary source of repayment if cash flow fails
- Capacity: the ability to return the bank’s investment