The 5 C’s of Retail Small Business Loans
Ever wonder what in the world bank managers base their decisions on? After all, it seems like any good hearted person with a business plan and some collateral ought to be able to get a small business loan, right? Unfortunately, it’s not that simple. Whether your business is a retail shop or a service industry, bank managers must assess risk with each and every loan they consider. But don’t despair, there are things you can do to help them realize that your loan request is not a risky one. They call it the 5 C’s of loan qualification:
- Character: Show yourself to be trustworthy with plenty of business expertise and good credit history.
- Capacity: Your business should have a positive cash flow, demonstrating the capacity to pay back the loan.
- Collateral: the more collateral you offer, the better. This includes equipment, real estate, inventory, and more.
- Conditions: What conditions affect your ability to repay? This could include anything from a violent neighborhood to a need for extensive equipment.
- Capital: Did you invest a lot of your own money in your business? If so, that shows a lot of faith in yourself and a willingness to take risks. It is a good sign for a bank.
With a little help and a lot of persistence, you’ll get that loan. Just be sure you fulfill the 5 C’s of loan qualification, and you really can’t go wrong.
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