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Need to Secure a Business Loan? Master the 5 C’s of Credit

July 2, 2019

By Kevin Riffey, Senior Vice President, Small Business Lending Director, The Bank of Tampa

You need a small business loan.  And lenders want to give you a small business loan. There’s only one thing standing between you and your much-needed capital: The Five C’s of Credit.

The Five C’s of Credit is a system that lenders use to gauge the creditworthiness of potential borrowers. The five C’s are: Capacity, Collateral, Character, Conditions and Capital. Let’s go through them one by one. We’ll tell you what each one means and explain why lenders care, then provide tips on how to handle each category if you come up short.


What does it mean? Capacity simply refers to your available cash flow.

Why do lenders care? Lenders need to see that you’ll have cash available to make payments. Capacity is also the biggest factor lenders use in determining the dollar amount of your loan. It’s derived by poring through things like bank statements, debt service coverage ratio and cash flow projections.

What if mine is low? If you don’t have the cash flow needed to secure a traditional business loan, the Small Business Association (SBA) gives you options. The SBA doesn’t lend money directly to small business owners. Instead, it sets guidelines for loans made by partnering lenders like The Bank of Tampa. You can learn the basics of SBA loans in this informative blog post.


What does it mean? Assets like inventory, cash, equipment and real estate can be pledged to support your loan.

Why do lenders care? Collateral is the lender’s back-up plan should you not be able to repay your loan.

What if I don’t have any? Once again, that’s where the SBA comes in. The program exists in part to provide financial solutions where there is little or no collateral to secure a traditional loan. The Bank of Tampa specializes in SBA 7(a) loans ranging from $150,000 to $5 million.


What does it mean? Character refers to how faithful you’ve been paying off past debts on time.

Why do lenders care? Lenders prefer to work with responsible individuals with a history of making their payments on time.

What if I have bad credit? It’s hard to secure a small business loan with bad credit, but not impossible. Before you dive into the world of alternative lending, talk with one of our SBA lending professionals and see what’s available. Our team is specifically focused on small businesses and will help you navigate the SBA lending process to secure your funding.


What does it mean? The overall state of the economy surrounding your business, including interest rates and the loan’s specific purpose.

Why do lenders care? Lenders feel that if businesses around you are booming, your business has a greater chance at success.

What if conditions are poor? If you need financing in poor conditions, the Small Business Administration’s most popular and forgiving loan, the SBA 7(a) loan, is a great option. The SBA offers some of the best business financing available, and The Bank of Tampa can help you navigate the process from start to finish. Read our SBA 7(a) blog entry for a deep dive into this great small business loan.


What does it mean? Capital refers to how much of your money you have invested in the business.

Why do lenders care? Lenders feel that the more money you have personally invested, the less likely you will be to default. Your personal investment is also used as a determining factor in how much sweat equity you will pour into the business.

What if I can’t find funds? If you don’t have significant money to invest in a business, then you may want to consider a few different options to raise capital for your equity contribution. Those options could include bringing on a minority partner with money to invest, a gift from a family member, seller financing or a combination of these options.

Go forth and apply!

The 5 C’s of Credit exist as a standard way for lenders to decide if you’re a reliable borrower, but none of them are set in stone. The best way to know if you’re eligible for either a traditional loan or an alternative loan program like SBA 7(a) is to sit down and talk with our team. Our professionals will help you select, apply for and quickly process the loan that is just right for your business.

If you’re interested in learning more about SBA lending and what we can do for you, please feel free to reach out to me directly at

The Bank of Tampa team is committed to working with small businesses in Tampa Bay. Partially guaranteed by the Small Business Administration, SBA loans provide an alternative when conventional financing does not fit the needs of a small business. Our SBA loan specialists help you select and apply for the right loan to fit your needs. We offer extended terms and low equity requirements to improve cash flow and business efficiency.

This article originally appeared on The Bank of Tampa’s website. To read more about The Bank of Tampa, visit:

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