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The 5 "Cs" of Raising Money From Banks

Do you know what banks look for when lending to entrepreneurs? If not, then it's time you learned the "five C's."

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This story appears in the February 2004 issue of Start Up.

The basic bank term loan is still one of the cheapest, most popular ways to finance a business. Term loans typically have fixed interest rates, monthly or quarterly repayment schedules, and a set maturity date. You will have to put down 20 to 25 percent of the total you want financed, because the banks want you to carry some of the risk. What do the best banks look for when deciding to make loans? The "five C's" are of the utmost importance:

1. Character: How have you managed other loans (business and personal)? What is your business experience? If you're a corporate executive and want to open a restaurant, you'd better have some restaurant experience.

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