Industry Trends

Small Business Lending ‘C’ Number Four

Aug 19, 2016 • 2 min read
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      Screen Shot 2013-10-22 at 10.21.31 AMAs we continue to discuss the 5 characteristics or ‘C’s of small business lending we are going to continue to highlight what these ‘C’s are and how they impact small business owners when looking to obtain a small business loan. In this post, we are focusing on the fourth characteristic, Capital.

      1. Character
      2. Credit Score
      3. Capacity
      4. Capital
      5. Collateral

      As a recap we talked about Collateral and why it was important for everything from a commercial real estate loan and how it also applies to other types of small business lending.


      Bankers and other small business lenders are a pretty risk-averse bunch. They want to see skin in the game. It demonstrates that  you have a real stake in the success and won’t be very inclined to walk away from your business and their investment.

      I know your blood, sweat, and tears are a pretty substantial investment too; and you’re not likely to walk away easily if you’ve invested a lot of effort into your enterprise. Because there are enough that your lender wants to see a little more investment in terms of dollars and cents. Looking at it from that perspective, it makes sense.

      Nobody wants to be the lender that finances a “Hail Mary” effort to save a sinking business. Having some cash on hand for day-to-day working capital, and maybe even some rainy day reserves tell the lender that the business loan you’re looking for isn’t a last-ditch effort to keep you alive for the next few months while your business continues to falter.

      Lenders are looking for small business owners who are in a position to grow and expand. That’s why they exist. If that describes your business, measure you ability to get a loan based upon the five ‘C’s. Pretend to be the lender and determine for yourself if you measure up.

      About the author
      Tyler Heaps

      Tyler is a member of the Lendio marketing team. He is passionate about digital marketing, small business, and helping small business owners succeed. Tyler is an outdoorsman and loves spending time with his family.

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