Here are the 5 Cs that lending institutions look at when determining whether to give you a loan to start or grow your business:
Capability
Your expertise in the industry and your experience as a manager or owner of a business similar to yours. Your educational background and your strengths and weaknesses and how you will complement those areas where your skills are lacking.
Cash Flow
You need to show that the earnings of the business can produce enough positive cash flow to repay the loan.
Character
You must demonstrate the ability to repay your debts consistently and on time and you must also show this through your personal business [tag-del]credit history[/tag-del].
Contribution
You must use some of your own money. Typically they look for 25% – 30% of the amount needed to be financed by your personal funds.
Collateral
What assets you possess that can be used to secure the loan so that if the business fails, they can recover all or part of their loan by liquidating that asset.