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

The Five Cs of Commercial Credit is a framework used by lenders to assess the creditworthiness of businesses. By understanding the Five Cs of Commercial Credit, bankers can assess the risk associated with lending to a particular borrower and make informed lending decisions. This helps banks to manage their risk exposure and ensure that they are lending responsibly.

Moreover, by evaluating each of the Five Cs, bankers can provide valuable advice to borrowers on how to improve their creditworthiness. This can help borrowers to secure financing in the future and build a strong financial foundation for their business.

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. The speaker explains how lenders assess each of these factors and provides practical tips for borrowers to improve their creditworthiness. Attend the session to see 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

• Introduction to the Five Cs of Commercial Credit
• Explanation of each of the Five Cs: Character, Capacity, Capital, Collateral, and Conditions
• 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.

The webinar will provide valuable insights into the lending process and learn how to navigate the credit landscape effectively. The webinar is also an excellent resource for anyone looking to secure financing for their business.

• Small business owners
• Credit analysts
• Loan underwriters, Loan review officers
• Commercial bankers, Credit department managers
• Senior lenders, Chief credit officers, Credit analysts
• Credit managers, Credit risk managers
• Risk managers, Enterprise risk managers
• Chief credit officers, Senior lending officer
• Bank director, Chief executive officer
• President, Board chairman
• Financial professionals, such as accountants, bookkeepers, and financial advisors.
• Entrepreneurs who are starting a new business and need financing.

A frequent speaker, instructor, advisor and writer on credit risk and commercial banking topics and issues, Martin J. "Dev" Strischek principal of Devon Risk Advisory Group based near Atlanta, Georgia.  Dev advises, trains, and develops for financial organizations risk management solutions and recommendations on a range of issues and topics, e.g., credit risk management, credit culture, credit policy, credit and lending training, etc.  Dev is also a member of the Financial Accounting Standards Board’s (FASB’s) Private Company Council (PCC).  PCC’s purpose is to evaluate and recommend to FASB revisions to current and proposed generally accepted accounting principles (GAAP) that are more appropriate for privately held firms.  He also serves as the PCC’s representative to FASB’s Credit Losses Transition Resource Group supporting the new current expected credit loss (CECL) standard to be implemented in fiscal year 2019 for public companies and 2020 for private firms.

The former SVP and senior credit policy officer at SunTrust Bank, Atlanta, he was responsible for developing, implementing, and administering credit policies for SunTrust’s wholesale lines of business--commercial, commercial real estate, corporate investment banking, capital markets, business banking and private wealth management. He also spent three years as managing director and credit approver in SunTrust’s Florida commercial lending and corporate investment banking areas, respectively. Prior to SunTrust, he was chief credit officer for Barnett Bank’s Palm Beach market. Besides stints at other banks in Florida, Kansas City, and Ohio, his experiences outside of banking include CFO of a Honolulu construction company, combat engineer officer in the U.S. Army, and college economics instructor.

A graduate of Ohio State University and the ABA Stonier Graduate School of Banking, Dev earned his M.B.A. from the University of Hawaii. Mr. Strischek serves as an instructor in several banking schools, including the Stonier Graduate School of Banking, and the Southwest Graduate School of Banking. His school, conference, and workshop audiences have included participants drawn from the ABA, RMA, OCC, Federal Reserve, FDIC, FFIEC, SBA, the Institute of Management Accountants (IMA) and the AICPA.

Mr. Strischek has written some 200 articles on credit risk management, financial analysis and related subjects, and he is the author of Analyzing Construction Contractors and instructor of  a contractor analysis workshop. A past national chair of RMA and former RMA Florida Chapter president, Dev has consulted on credit risk issues with banks in Morocco, Egypt, and Angola through the US State Department’s Financial Service Volunteer Corps (FSVC).