The five C's for credit applications

If you've ever been running around trying to get financial documents in order or sitting outside a bank manager's office nervously awaiting an interview, chances are you're familiar with the credit application process. In today's marketapplying for credit can be a long and painful process as banks have become increasingly cautious since the GFC.

So as an SME owner, how do you successfully secure a loan or line of credit? Generally speaking banks will consider a range of different factors when reviewing your application.

We've sourced five key points of your application that will fall under scrutiny during the process.


When a bank reviews your capacity they are ultimately determining how well your SME is equipped to pay back a loan. Banks review your financial documents such as cash flow forecasts, bank statements and budgets to get an idea of the financial security of the business to ensure you have all the documentation available before attending an interview with your bank manager.


Banks are cautious by nature so they will want some guarantees regardless of how solid your business plan is. Using your assets as collateral security for your loan is a great way to put their mind at ease and increase the possibility of obtaining a loan. Collateral can be anything from company vehicles and store equipment to accounts receivables or real estate.


First impressions last longest so it's vital you make a good connection from the very beginning. Even though banks will use your references to assess how trustworthy you are, a charming first impression can do wonders for making them feel immediately comfortable.


This doesn't refer to the conditions of the loan, but rather the conditions that could affect your ability to repay the loan. Banks will always look at the external environment and determine if things like customers, competitors, changing cost of supplies or other economic indicators are likely to impact your success in the near future.


The final key indicator to a bank is your own net worth and equity as a business owner. The more personal finance you have used to back your business the better impression it leaves with the bank as it displays faith in your own project.

Want to learn more about the loan application process? Try these articles:

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