When a small business generally applies for a business loan, the traditional banks or the other lenders follow some protocol that evaluates whether the firm fits the application. One major thing that most of the loan providers follow is the 5C of credit analysis while providing the business loan. When you get in touch with a business loan advisor in Kolkata, he will evaluate the 5C factors and then decide whether to provide the loan or not. Therefore, ensure that your loan application process fulfils these below points to help you get the business loan successfully.

Capacity

The first C is capacity, which is one of the most important factors to keep in mind. It refers to the ability of the firm for repaying the loan. The borrower might have provided how and when he can repay the loan in the loan application. Here, he has to state the revenues and expenses; he should have to indicate the number of cash flows and timing of cash flows with regards to the repayment structure. Capacity also refers to the credit history. While applying for a business loan, do not forget to mention every source of repayment.

Collateral

Collateral has a distinct relationship with capacity. It is the type of security that you can provide to the bank or loan lenders. It can be any building, equipment or any other items owned by you or specifically by any loan lender. Collateral can also include a guarantee by someone; if you are unable to pay the loan, the other party will do it for you. As the money is getting tighter in this economic situation, there is also an increased chance that the banks will look for more guarantees in terms of collateral.

However, when choosing the loan providers in Kolkata, they do not have strict guidelines regarding the collateral. Therefore, applying for the loan is easy, and you can get it in few days after application.

Capital

Capital represents the owner’s investment in the overall business. When you apply for the business loan, the borrower should show some significant investment in the overall business before the lender considers making the business loan. The loan provider will first evaluate the amount of loan you need before finalising the deal.

Conditions

The conditions are two-fold. First, the condition refers to the overall economic climate and the external environment surrounding the business firm. For example, it becomes too difficult for small businesses to repay during recession or times of tight credit. The second part of the condition refers to the intended purpose to get the loan. For example, for what reason are you looking for a business loan? Why do you need money- to buy new equipment or for business expansion?

Character

Character is the subjective judgement that the loan provider about the client makes. The loan provider decides whether the client is reliable in terms of loan repayment. This is where the education and experience of the client come into existence.

These are the major 5Cs that are considered while having a business loan. If you look for business loans in Kolkata, head to MRD Financials, the trusted source for consultation and advice on business loans. Visit the official site now.