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Wednesday, December 16, 2009

The 5 "C's" of Credit

Farm Credit was chartered for the specific purpose of serving agriculture both short-term and long-term needs. We are well versed in the needs of operating loans such as fertilizer, seeds, chemicals, for the purchase of equipment or land to farm. ArborOne understands the intricacies of agriculture and also realizes it is a cyclical business.

Broadly, lending decisions are based on what we term the 5 "Cs" of credit. They are:
- Character - which includes not only the ability to pay, but also the desire to pay
- Capacity - the ability to repay the debt
- Conditions - basic conditions under which the loan would be made which includes terms, rates, and special requirements
- Capital - which is the financial condition of the customer including debt to net worth ratios and working capital ratios, etc.
- Collateral - it is our intent to be a "cash flow" lender and not depend on collateral to repay the loan.


Anonymous Anonymous said...

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7:18 PM  

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