Bankability Assessment Guide

What is business bankability?

Bankability is the qualitative and quantitative evaluation lenders apply to a business, traditionally framed as the 5 Cs of Credit: Character (credit history), Capacity (cash flow), Capital (owner equity), Collateral (assets), Conditions (industry/economy).

Why this matters

• Self-assessment matches lender perspective; surprises in underwriting are almost always lender-visible issues borrowers ignored.
• Each C is independently scoreable and individually fixable.

How it works

• ›Character: personal and business credit history, payment record, prior bankruptcies, lawsuits, public records.
• ›Capacity: cash flow available for debt service. DSCR ≥ 1.25 generally required.
• ›Capital: owner equity contribution, retained earnings, debt-to-equity ratio.
• ›Collateral: business and personal assets pledgeable against the loan.
• ›Conditions: industry outlook, economic conditions, use of funds, loan structure.

Examples in practice

Step-by-step process

1. 1

   Score each of the 5 Cs
2. 2

   Identify weakest C
3. 3

   Build improvement plan for weakest C
4. 4

   Re-score quarterly

Action checklist

• Character score 8+/10
• Capacity score 8+/10
• Capital score 7+/10
• Collateral score 7+/10
• Conditions score 7+/10

Common mistakes to avoid

• Focusing on one C while ignoring others
• Skipping qualitative Cs (Character, Conditions)
• Applying without self-scoring

Frequently asked questions