Get to know what the five c’s of credit are

Lending money for your business can be stressful. Companies that lend money to businesses have checklists to consider, so ensure you comply with them for a positive result. When you provide a lender with additional but relevant information, you help them make a decision faster. When they have to keep asking for references or documents, you know they are struggling with your application.

What are the five C’s?

Capacity, capital, collateral, conditions, and character—can help you get a head start when you apply for a loan.

Let’s see what these mean and how you can prep your application for a positive outcome?


The most crucial factor of the five is your business’s ability to repay loans. Ensure your business plan showcases the steps to repay the loans. Lenders look at your business revenue, expenses, cash flow, and repayment timing. They also take into account your business and personal credit scores.


The cash you invest in your business is called capital. To get a loan, you’ll need to invest in your business first. Capital may come from deposits or money from other sources. The lenders want to see that you have a vested interest in the success of the business.


When they evaluate a loan application, a lender will also consider your business collateral as an alternative source of repayment. They want to make sure that they can recover the loan through collateral if you stop paying. Bizcash only works with secured loans, such as equipment, vehicles, property, or inventory. The loan amount is based on a percentage of the collateral’s value, called the loan-to-value ratio (LTV). Different types of collateral have different LTVs.


Research into your market is critical to demonstrate your customer and a clear reason for the loan. Who are your competition, the type of industry, and your experience managing a business?


The final C takes a look into who you are as a borrower. They will consist of your educational background, business experience, and personal credit history. Statistically, personal credit management indicates how a person will manage their business credit. If you can provide references or other background information, it will be considered. A good track record in the industry will help.

Why Are The five C’s Important?

The five C’s of credit provide a framework that the lender will use to determine your eligibility for a loan. Your creditworthiness, potential success of the business, and the likelihood of them being repaid.

Before you apply for a loan, answer the following questions:

  • Is my business in compliance with all laws and regulations?
  • Have I researched and evaluated the industry and the competition?
  • Do I provide a viable product or service despite the competition?
  • Am I fully committed to making my business succeed?
  • Am I 100% familiar with the 5 C’s of credit?

Bizcash is a South African business that looks to grow and develop SMME’s in SA. For Credit or business finance options, get in touch with us on 0861 93 93 93 or email us at or contact us here.

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