Hawaii’s economy is built, in large part on small business and sometimes those businesses need financial help.
From a lunch wagon to a dress boutique, there are times when business owners may need a loan to sustain their operation.
Central Pacific Bank’s Galileo Tan talks about the first questions he hears from potential borrowers. "What is it exactly that you’re looking for? And what it boils down to is that every financial institution has different standards and processes but what it comes down to though is there will be some variation of the five C’s of credit that will be mentioned."
First on the five C list, character. "We do look at the character of a business as well and try to make sure that the business does have the capacity to pay us back based on how they do business in the community as well as with their clients and their customers," said Tan. Next C, capacity. Can the business sustain itself through the life of the loan. Next C, capital. Is the business owner truly invested in the business? "So they’re very serious about it. They’ve already taken that effort to produce their own capital for the business. So maybe the funding that they need from a financial institution is just to supplement what they’ve already gotten." Some things, business owners may not be able to control, the fourth C, conditions. How would that business fare during a downturn? "would that business be able to sustain, continue to exist in an economy that isn’t as good. So we look at an economy that isn’t as good. So we look at economic conditions and how a business in its particular industry could continue to last during those conditions," said Tan. The final C, collateral. Does the company own real estate, business machines? "Vehicles that the business may use. So we look at all of these as secondary possible secondary sources of re-payment, just in case a business’s cash flow isn’t sufficient to pay back the loan if certain economic conditions were to cause it to not be able to pay back the loan in time," Tan added.
From a lunch wagon to a dress boutique, there are times when business owners may need a loan to sustain their operation.
Central Pacific Bank’s Galileo Tan talks about the first questions he hears from potential borrowers. "What is it exactly that you’re looking for? And what it boils down to is that every financial institution has different standards and processes but what it comes down to though is there will be some variation of the five C’s of credit that will be mentioned."
First on the five C list, character. "We do look at the character of a business as well and try to make sure that the business does have the capacity to pay us back based on how they do business in the community as well as with their clients and their customers," said Tan. Next C, capacity. Can the business sustain itself through the life of the loan. Next C, capital. Is the business owner truly invested in the business? "So they’re very serious about it. They’ve already taken that effort to produce their own capital for the business. So maybe the funding that they need from a financial institution is just to supplement what they’ve already gotten." Some things, business owners may not be able to control, the fourth C, conditions. How would that business fare during a downturn? "would that business be able to sustain, continue to exist in an economy that isn’t as good. So we look at an economy that isn’t as good. So we look at economic conditions and how a business in its particular industry could continue to last during those conditions," said Tan. The final C, collateral. Does the company own real estate, business machines? "Vehicles that the business may use. So we look at all of these as secondary possible secondary sources of re-payment, just in case a business’s cash flow isn’t sufficient to pay back the loan if certain economic conditions were to cause it to not be able to pay back the loan in time," Tan added.
See the original article at: KHON2 Local News
