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The 7 “C’s” of Credit

Provided by the International Finance Corporation


1.  Capacity

Do I have experience running a business? Have I had this business for more than one year? Do I know this industry well? Do I have a good team working for me? Is the business operating well?

2.  Cash Flow

Is my business profitable? Do I have a bookkeeping system that will allow me to demonstrate this to the bank? Can I produce financial statements from this data? Is my cash flow sufficient to make the loan payments?

3.  Capital

Do I have sufficient reserves, or other people who could invest in the business, should unexpected problems or hard times arise?

4.  Collateral

Do I have collateral (business and/or personal) which I can offer? Is the property I own mine, or do I share it with my husband or family?

5.  Character

Can I show the bank that I am honest, and keep my promises? If I've had a loan or supplier credit before, did I always pay on time? Have I always paid my personal bills on time? Can I prove this to the bank? Do I have good references?

6.  Conditions

Is the industry that I am in a good one? Do I have a unique product or service which makes me different from my competitors? Is there growing demand for my products? Does a loan make sense for my business?

7. Commitment

Am I committed to working hard so that my business will succeed? Do I really want it to grow? Have I put my own money into the business?

 

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The material in this work is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law.  IFC does not guarantee the accuracy, reliability or completeness of the content included in this work, or for the conclusions or judgments described herein, and accepts no responsibility or  liability for any omissions or errors (including, without limitation, typographical errors and technical errors) in the content whatsoever or for reliance thereon.

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