Starting up or expanding a business means you need people in your corner helping you navigate the new, exciting chapter in your business. One of the first people you should get to know is your local lender. Your lender will sit down with you and talk through the specifics of your business plan. They will then use established criteria to evaluate you as the borrower and your borrowing request. This is called the 5 C’s of Credit. The criteria are as follows:

1. Character: This refers to the borrower’s reputation and history of paying debts on time. Lenders will look at the borrower’s credit report and score to assess their past behavior, as well as any bankruptcies or foreclosures on their record.

2. Capacity: This refers to the borrower’s ability to repay the loan. Lenders will look at the borrower’s
   income, expenses, and debt-toincome ratio to determine whether they have the financial resources to make payments on the loan.
   
3. Capital: This refers to the borrower’s assets and net worth. Lenders will look at the borrower’s
   savings, investments, and property to determine whether they have the resources to cover the loan in case of default.
   
4. Collateral: This refers to any assets that the borrower offers as security for the loan. Lenders will look at the value of these assets and their marketability in case of default.
   
5. Conditions: This refers to the economic and industry conditions that may affect the borrower’s ability to repay the loan. Lenders will consider factors such as the borrower’s industry, market conditions, and overall economic outlook to determine the risk of the loan.

By evaluating these 5 C’s, lenders can make informed decisions about whether to approve a loan and at what terms. Borrowers who consider these factors in their business plan and have a strong credit history, stable income, and valuable assets are more likely to be approved for loans with favorable terms.

Working with a local lender means you can build a plan for success together and help move your business forward! At Mid America Bank, we’re ready to serve as your trusted local lender. For more information about how we can help with your business journey, visit our website.

Brad Roling is the Columbia Market President for Mid America Bank. Brad has more than 10 years of banking experience that he uses to help businesses in and around Columbia thrive. When he is not helping your business with its financial needs, Brad is serving the community in a variety of capacities. He is proud to serve on the Ronald McDonald House Mid-Missouri Board of Directors as Treasurer, the Columbia Chamber Foundation Board, and Beta Theta Pi Advisory Board. Brad is a proud Mizzou grad and loves cheering on the Tigers!