I've talked about this before but in today's very challenging commercial lending market I thought it bears repeating:
The Five Cs of Credit: What Really Drives Loan Decisions
Whether you’re seeking capital or advising clients, most commercial lending decisions come down to five fundamentals:
The Five Cs of Credit 👇
1️⃣ Character
Your track record matters. Lenders evaluate transparency, integrity, and how consistently obligations have been met.
2️⃣ Collateral
Collateral shows commitment and shared risk. Banks typically lend less than 100% of value.
3️⃣ Conditions
Economic environment, industry dynamics, seasonality, and customer concentration matter.
4️⃣ Capital
Equity investment and reasonable leverage signal resilience.
5️⃣ Capacity (the most critical)
Cash flow repays loans—not collateral or projections.
✅ Bottom line: Weak cash flow and poor character are the most common reasons loans are declined.
If you’re planning to raise debt capital in the next 12–18 months, now is the time to evaluate your Five Cs.
Small adjustments today can materially improve pricing and approval odds tomorrow.