The Five Cs Of Commercial Credit: The Basic Elements Of Credit And Lending

Bankers have relied on the 5 C's of credit - capacity, conditions, collateral, capital, and character for many years, but what do these terms really mean, and how do lenders use them to determine whether a potential borrower is creditworthy? 

This simple credit model is simple to understand and easy to use. Attend the session to C the big picture for credit analysis and underwriting.

• The first four C’s -
  capacity, conditions, collateral, and character- evaluate a borrower’s ability to repay, but character forces the lender to examine closely the borrower’s willingness to repay.
• Learn how to employ the first four C’s to analyze repayment ability
• Learn how to use the fifth C- character - to judge a borrower’s willingness to repay

• Capacity measured by the ability to repay from cash flow
• Conditions evaluated in terms of how borrowing needs change over the business cycle and what makes some industries more vulnerable to downturns than others
• Collateral analysis in terms of relative liquidation values
• Capacity considered in terms of the borrower’s equity cushion and the degree of relative leverage possible
• Character assessed in terms of willingness to repay as evidenced by payment history as well as tips for fraud prevention

• Credit analysts
• Loan underwriters
• Commercial bankers
• Loan review officers
• Credit department managers
• Senior lenders
• Chief credit officers.
• Credit analysts
• Credit managers
• Credit risk managers
• Loan review officers
• Risk managers
• Enterprise risk managers
• Chief credit officers
• Senior lenders
• Senior lending officer
• Bank director
• Chief executive officer
• President
• Board chairman