Traditionally bankers look at what are called the 3 “C”s – character, credit and collateral. Character means more than not having a criminal record. It means that the banker feels confident that you are not going to suddenly disappear if the business runs into trouble.

Specifically bankers like to see ties to the community such as long residence, family ties, and home ownership. A clean credit history is important. A couple of late credit card payments shouldn’t be a factor, but missing mortgage payments for three months in a row will require a good explanation.

Bankers like good character and good credit, but they live for solid collateral. Land, buildings, plant and machineries – that’s the kind of stuff that bankers really like for collateral – solid value and likely to be worth a lot even if the business goes bust. Inventory, raw material, and goods are second choices for collateral – they will lose their value more quickly than fixed assets but still be worth something.

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