Issuing Credit

__________ is the most critical of the “Five Cs” of credit analysis because it refers to how exactly the borrow intends to repay the loan.

• Capacity

• Character

• Capital

• Conditions

In the event that the borrower is unable to repay the loan, the _________ which was pledged toward the loan will be taken as payment.

• Interest

• Capital

• Collateral

• Conditions

Money invested in the business by the borrower is ______________.

• Interest

• Collateral

• Credit

• Capital

The general impression made by the borrower, partly shown by credit history, is ____________.

• Capacity

• Character

• Capital

• Conditions

_________ is a fee for borrowing which is a set percentage of the amount borrowed.

• Financing

• Interest

• Equity

• Collateral

The ____ give a snapshot of the borrower’s business at a specific time.

• A. Personal financial statement

• B. Profit and loss statement

• C. Balance sheet

• D. Statement of cash flows

The income statement, also known as the ________, figures sales minus costs of goods sold minus other expenses.

• A. Profit and loss statement

• B. Personal financial statement

• C. Statement of cash flows
  

• D. Balance sheet

To find the borrower’s net worth, the lender should look at which statement?

• A. Statement of cash flows

• B. Balance sheet
  

• C. Pro forma financial statements

• D. Personal financial statement

The ___________ allow businesses to make estimates about future sales levels, expansion costs, or general business conditions.

• A. Statement of cash flows

• B. Profit and loss statement

• C. Balance sheet
  

• D. Financial projections

Which financial statement do lenders NOT use to help determine credit decision?

• A. Balance sheet

• B. Pro forma financial statements

• C. Statements of cash flow
  

• D. Personal financial statement