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2 NEW C's of Credit! Apply these in your business borrower relationships

The six Cs of Credit (or 3 or 5) are taught to every lender when they first start out. Here are some:

  • Character
  • Capacity
  • Capability
  • Cashflow
  • Collateral
  • Coverage
  • Context
  • Conditions

I know, that is more than six. Some of them are synoyms.

Then Paul Beretz of Pacific Business Solutions added three more if you are working with international companies or new-to-the United States individuals:

  • Country
  • Culture
  • Currency

So here are my additions that are always important but more-so now:

  • Calm
  • Communicate

Calm is so important now. Business owners and managers are spooked. So are bankers, for that matter. Consider your demeanor, what you say, how you say it. This counts when you are making phone calls, attending networking events or visiting borrowers and prospects.

If you are not sure how to get grounded, consider a conversation with a more seasoned lender who has been through a downturn or two. Consider yoga and meditation. Join the gym. You will be more calm if you relieve your stress levels.

Communicate with your borrower. This is easier said than done. Right now, I am guessing that many of your borrowers would be nervous if the banker called…especially if you don’t generally reach out between loan requests.

It is important so that you can anticipate challenges the business is facing that could impact their ability to repay. The sooner you know a business is challenged, the more likely you can offer resources or ideas at a time that they can do some good.

Brainstorm with your colleagues ideas for nonthreatening ways to connect with your business borrowers. Perhaps it is a by-invitation opportunity to attend a get-together with a local economist who can give them current information to succeed. Perhaps it is to deliver a book, white-paper or industry-specific resource you have purchased for them. Maybe it is to include them in a community activity.

So there you have it…6 Cs plus 3 international Cs plus 2 economic downturn Cs.

Do you have any Cs to add?

About the Author
Linda Keith CPA is an expert in credit risk readiness and credit analysis. She trains banks and credit unions throughout the United States, both in-house and in open-enrollment sessions, on Tax Return and Financial Statement Analysis. She is in the trenches with lenders, analysts and underwriters helping them say "yes" to good loans. Creator of the Tax Return Analysis Virtual Classroom at www.LendersOnlineTraining.com, she speaks at banking associations on risk management, lending and director finance topics.