Business Financing Services

The Three C's of Lending

Prior to advancing a loan to a company, a lender will look for these three items to be in place:

1. Collateral

Lenders are always concerned about the "worst case scenario"; that is, if the loan goes bad, what collateral can they repossess and liquidate in order to satisfy the loan or minimize their losses. Collateral can take many forms including (but not limited to) a general security agreement on all of the assets of the debtor and a personal guarantee by the majority owner of the company being advanced the funds.

2. Credit

Lenders will check the credit rating of both the company and the principal shareholders (especially when a personal guarantee is involved) to ensure that the debtor has a history of prompt payment.

3. Cash Flow

Lenders want to ensure that debtors have the cash flow necessary to make the regular payments required as part of the loan agreements. They will review the relevant financial information (annual and monthly financial statements, cash flow statements etc.) to satisfy themselves of this requirement.

Businesses in search of financing must have all three of the above in good standing to even be considered for a loan from a Schedule A Bank. There are however, other non-traditional lenders that may only require one or two of the three C's to qualify a business for a loan.

Aries Advisory Group has extensive experience obtaining financing for our clients. Click here to see how we can help you get the loan you need.