Why do you think lenders use the 5 C's of credit? Is it a fair guide...

Why do you think lenders use the 5 C's of credit? Is it a fair guide on whether to accept or reject a person for a loan? How is borrowing money with a SBA backed lender versus borrowing money backed from a conventional lender.

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Expert Solution

It is definitely fair to reject person for laons based on 5C of Credit viz. Character, Cash Flow, Condition, Capital, Collateral. Rhese parameters are used to adjudge credibility of person and transparency of his cash flows and expected prijections of cash and capital and to what extent Collateral can be sharedbefore loan is granted.

SB anacked loans can be offered upto 85% of 1,50,000 dollars and 75% of 1,50,000 dollars or more.

Conventional loans comparatively hav elower allowed limit, higher interest rates an dlower tenure.

keosha answered 1 year ago

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