"Cee-ing" the light when it comes to landing a loan

Nominate a Top Woman in Business. Click here. Nominate an NEPA business professional under 40. Click here.

20 Under 40: JenniferDessoye

Photo: N/A, License: N/A, Created: 2016:11:17 11:10:02

Dr. Jennifer Dessoye is assistant professor of occupational therapy at Misericordia University and owner of Bright Beginnings Early Learning Academy (BBELA). Discontent with the early education curriculum and understanding of human development and neurolo (read more)

20 Under 40: Amy Hlavaty Belcher

Photo: N/A, License: N/A, Created: 2016:11:09 13:55:46

Amy Hlavaty Belcher, 39, owner and artistic director of Abrabesque Academy of Dancing, believes that for those who have been given much, much is expected. “I just try hard to do my best,” she said. I have been blessed with many opportunities and many gift (read more)

20 Under 40: Christopher Hetro

Photo: N/A, License: N/A, Created: 2016:11:14 11:21:35

Chris Hetro, 33, works hard and plays hard. “A strong work ethic is important, but finding balance outside of work is important because life is too short and you need to enjoy it,” he explained. As an electrical engineer and project manager at Borton-Laws (read more)

20 Under 40: C. David Pedri

Photo: N/A, License: N/A, Created: 2016:11:14 15:19:17

For attorney C. David Pedri, 37, it’s all about a combination of qualities that contribute to success. “My philosophy is simple: be open and honest, treat people the way you would want to be treated, with respect, and work hard to attain your dreams. The (read more)

20 Under 40: Ed Frable

Photo: N/A, License: N/A, Created: 2016:11:09 11:13:04

Ed Frable, 28, believes “if I work hard and stick to my word, good things will happen. My crew will not be deterred. We will re-evaluate our game plan and not give up until the job is complete,” explained Frable, the owner/operator of Ed Frable Constructi (read more)

20 Under 40: William H. Bender II

Photo: N/A, License: N/A, Created: 2016:11:16 13:11:08

William H. Bender II, CFP, CIMA, CRPC, loves what he does. “I’m lucky. I come to work every day excited to help the people and institutions we work with,” explained Bender, 34, first vice president at Bender Wealth Management Group, Merrill Lynch. The fam (read more)

20 Under 40: Angelo Venditti

Photo: N/A, License: N/A, Created: 2016:11:14 16:09:11

Angelo Venditti, 38, heard a call to the helping professions early on. Geisinger Northeast’s chief nursing officer answer was to volunteer for his local fire company. After high school, he became a paramedic, then enrolled in nursing school. Three years a (read more)

20 Under 40: Donald Mammano

Photo: N/A, License: N/A, Created: 2016:11:17 12:38:37

At 20, Donald Mammano began his own company, while attending the University of Scranton. Mammano, now 33, and president of DFM Properties, recalls, as a youngster, holding a flashlight while his father fixed the kitchen sink. “From that point on I was fas (read more)

20 Under 40: William J. Fennie III

Photo: N/A, License: N/A, Created: 2016:11:15 09:50:19

William J. Fennie III, 27, is always knocking on the proverbial door, because he knows one day, one will open. As an investment specialist with Integrated Capital Management (iCM) he cannot take “no” for an answer. “I make cold calls every day to invite f (read more)

20 Under 40: Marcus Magyar

Photo: N/A, License: N/A, Created: 2016:11:14 13:25:24

As an advisor at CAPTRUST Financial Advisors, Marcus N. Magyar, CFP, 30, provides comprehensive wealth management and investment portfolio services to business owners, executives, families and high-net worth individuals. His multi-disciplinary team of pro (read more)

20 Under 40: Heather Davis

Photo: N/A, License: N/A, Created: 2016:11:10 13:34:44

Heather M. Davis, 33, director of marketing and communication, is responsible for creating, overseeing and implementing a strategic marketing and comprehensive communications plan for The Commonwealth Medical College (TCMC). She is also responsible for pr (read more)

20 Under 40: Alexandria Duffney

Photo: N/A, License: N/A, Created: 2016:11:14 14:24:50

Alexandria Duffney, 30, is competitive by nature and loves a good challenge. These qualities have led her to her position as associate director of graduate admission at Wilkes University. Here she works with prospective students interested in enrolling in (read more)

20 Under 40: John Culkin

Photo: N/A, License: N/A, Created: 2016:11:07 17:18:26

John Culkin’s tenets inform: “Less haste equal more speed; the same boiling water that softens the potato hardens the egg, it is all about what you are made of, not the circumstances surrounding you; and don’t ask someone to walk a mile in your shoes, bef (read more)

20 Under 40: Conor O'Brien

Photo: N/A, License: N/A, Created: 2016:11:14 17:19:58

“What could be worse than getting to the end of your life and realizing you hadn’t lived it,” mused Conor O’Brien.” As co-founder and executive director of the Scranton Fringe Festival, O’Brien, 25, is responsible for leading the development of the overal (read more)

20 Under 40: Jessica Siegfried

Photo: N/A, License: N/A, Created: 2016:11:10 14:12:08

Jessica Siegfried, 38, is senior designer with BlackOut Design Inc., where she is responsible for all creative design at the full-service agency, from traditional branding and print to collateral and front end web design. “I’ve always had an interest in t (read more)

20 Under 40: David Johns

Photo: N/A, License: N/A, Created: 2016:11:08 10:15:37

David Johns’ career path has been shaped by his diverse experiences. As director of structural engineering at Greenman-Pedersen Inc., Moosic, Johns, 39, ensures that his engineering and consultant teams provide clients with their best effort. “We complete (read more)

20 Under 40: Robyn Jones

Photo: N/A, License: N/A, Created: 2016:11:14 12:41:32

Robyn Jones, 38, president of ReferLocal LLC, has learned just as many lessons from her business successes as she’s had from her failures — and she believes it’s important to share that knowledge with her employees. After graduating from American Universi (read more)

20 Under 40: Nisha Arora

Photo: N/A, License: N/A, Created: 2016:11:14 10:02:06

Nisha Arora, 36, tries to be the best version of herself every day. As general counsel for ERA One Source Realty Inc., she realized she cannot control other’s behavior so “I try to focus on myself and how I can be better,” she explained. Arora’s responsib (read more)

20 Under 40: Justin Sandy

Photo: N/A, License: N/A, Created: 2016:11:10 14:59:27

Starting at a young age in Hazleton, Justin C. Sandy, 33, found a passion for running. He became a member then a coach for Misericordia University’s cross country and track and field programs. “It was at Misericordia that I also garnered the profound sati (read more)

20 Under 40: Dr. Ariane Conaboy

Photo: N/A, License: N/A, Created: 2016:11:16 09:38:07

As a doctor of internal medicine at Physicians Health Alliance, Dr. Ariane M. Conaboy, 34, realizes the importance of human life and how fragile it can be at times. Conaboy graduated from Scranton Prep and the University of Scranton with a double major in (read more)

Find us on Facebook!

Photo: N/A, License: N/A

"Like" us on Facebook for all of the latest news! (read more)

Follow us on Twitter!

Photo: N/A, License: N/A

Follow us for constant updates! (read more)

Article Tools

Font size
Share This

Photo: David W. Coulter, License: N/A, Created: 2015:09:16 14:22:44


By Joe Bonsick

Obtaining a loan from a bank might seem like a complicated, confusing and convoluted process — three “C” words that any business owner looks to avoid.

On the contrary, bankers use a relatively straightforward standard called the “Five Cs of Credit” to determine the creditworthiness of a borrower. Knowing these can help improve a borrower’s chances of getting approved for credit.

The “Five Cs of Credit” are character, capacity, capital, collateral and conditions.

Banks view character as the most vital aspect that a borrower can have. That may seem counterintuitive. After all, character is a subjective measure. It doesn’t have a line on a pro forma or tax return.

But demonstrated character breeds trust. It reflects the reputation and integrity of the business and its management. To assess character, bankers must step out of the electronic world of emails and texts and meet with borrowers face-to-face. They talk with the management team. They talk with community and civic leaders. They might even talk with your employees and customers. Bankers want to know you are true to your commitments and have high ethical standards. In our marketplace, it’s nearly impossible to get a loan without this all-important first “C.”

The next most important “C” is capacity, or the ability to pay back a loan in good time. Capacity is a more objective measure. You can typically determine it from the borrower’s historical financial statements, namely the income statement and statement of cash flows. Bankers will work with you to examine how the loan will affect both your income and your expenses.

Character and capacity are by far the most significant and least flexible of the “Five Cs of Credit.” Generally speaking, if you are cleared in these two areas, you will likely be approved for a loan. The remaining three “Cs” are still important, but often are viewed as being more flexible.

The third “C,” capital, refers to a borrower’s net worth. This is a quantitative measure bankers use as a secondary indicator of financial health. It is used to determine if a borrower is becoming overleveraged or financially strained with too much debt.

The fourth “C,” collateral, is another quantitative measure. Collateral is the asset (or assets) pledged as security for the loan’s repayment. It’s what the bank receives if the loan goes into default.

Collateral, and to some extent capital, are evaluated to protect the bank from financial loss. If the borrower takes off or heads south after the loan is made, the lender still needs to be repaid; after all, it must look after the interests of its depositors and stockholders. Collateral and capital ensure that. Collateral is a backup measure in case the borrower is unable to make the loan payments.

The final “C,” conditions, looks at external forces that could affect the business, both on a micro and macro level. “Conditions” have been receiving more attention since 2007, when the nation’s economy plunged into a recession. In some instances, borrowers were making smart decisions, yet poor economic conditions prohibited them from reaching the financial forecasts on which loans were based.

Since the recession, the banking industry has reassessed the large impact the economy can have on good borrowers and is doing its best to adapt to the post-recession realities.

For many of the Cs, quality financial statements are critical. But equally important is the personal relationship between the business owner or top executives and the bank management.

A strong, long-term relationship can provide unparalleled insight into the borrower’s character. The relationship will provide useful information beyond balance sheets and statements of cash flow, potentially reducing the bank’s perception of risk and increasing the likelihood of approval.

Bankers need to be transparent with their clients, and the “Five Cs of Credit” approach helps borrowers understand where they stand when applying for a loan.

Moreover, knowing the Five Cs up front can compel a borrower to strengthen one or more of them in preparation for a future loan.

A good banker will work closely with potential borrowers far in advance of their application to help them navigate as many of the Cs as possible.

In the end, the Cs are not only good for obtaining credit from a bank, they’re good business practices. A company that’s constantly attuned to character, capacity, capital, collateral and conditions is a company that is fundamentally strong and has a foundation for growth — with or without bank credit.

Consistency is ultimately what each bank strives for, which is why most financial institutions use the “Five Cs of Credit” principle. It provides an easy-to-follow framework for both parties. By sharing this concept, bankers can work more closely with borrowers to achieve the results that both parties desire.

We welcome user discussion on our site, under the following guidelines:

To comment you must first create a profile and sign-in with a verified DISQUS account or social network ID. Sign up here.

Comments in violation of the rules will be denied, and repeat violators will be banned. Please help police the community by flagging offensive comments for our moderators to review. By posting a comment, you agree to our full terms and conditions. Click here to read terms and conditions.