Character Leads 5 C’s of Credit in Small Business Lending

By Allan M. Bookout, First Bank & Trust Company

Young bankers pursuing a career in business lending or credit are taught early in their training about the "5 C's of Credit": character (integrity), capacity (sufficient cash flow to service the obligation), capital (net worth), collateral (assets to secure the debt), and conditions (of the borrower and the overall economy).

Business lending requires mutual trustWhile most of the 5 C's involve numbers, ratios or percentages – and it is true more focus is on numbers in business lending today than a generation or two ago – character has not been forgotten. In fact, in small business lending, character is often the most important C.

What does character mean to a bank and for you? While "integrity" is an excellent synonym for character, as it involves truth and honesty which are paramount in banking relationships, let me offer "trust" as another key concept.  

A positive relationship between a bank and a borrower is anchored in mutual trust. From the bank’s side, your banker needs to be able to:

  • trust that the financial information you provide is accurate
  • trust that the values you place on your assets are realistic, not inflated
  • trust that you have disclosed all of your debts
  • trust that you are providing all relevant information, not just what is favorable
  • trust that you are not hiding negative information
  • trust that you will always tell the truth

While trust is essential, so is the tone of interactions between the borrower and the banker. If you try to intimidate your banker, you may sometimes get what you want, but this can be detrimental to a long-term, mutually beneficial relationship. We are expected to respect everyone who walks in our doors. Likewise, respect from customers is appreciated and helpful.

Character, one of the 5 C's of Credit, can lead to exceeding others' expectations and building trust. Just as banks try to exceed their customers’ expectations with every interaction, when business owners exceed their bank’s expectations, good things tend to happen.

Have a question about small business loans for First Bank & Trust Company? Please contact Allan Bookout, Vice President, Commercial Lending Officer, First Bank & Trust Company.

Read more from First Bank & Trust Company on Handshake 2.0.

First Bank and Trust CompanyFirst Bank & Trust Company, one of the top community banks in the United States, is a diversified financial services firm with office locations in southwest Virginia – serving Blacksburg, Christiansburg and surrounding areas – northeast Tennessee, and the New River Valley and Shenandoah Valley of Virginia. Financial objectives are addressed by offering free checking products for personal and business accounts, and assessing lending solutions managed by mortgage, agricultural and commercial lending divisions. Comprehensive financial solutions are available through trust and brokerage service representatives. For businesses, First Bank & Trust specializes in business services, including online banking and online billpay, and business loans.

First Bank & Trust Company is a client of Handshake Media, Incorporated, the parent company of Handshake 2.0.

Cognichoice Co-founder on mHealth Zone Live: Advice to Health IT Developers
Real Estate: Coming Back?


  1. Trust is very important in making a deal with someone especially if it involves money. It is something that may improve or destroy your relationship to others. Thanks for sharing the 5 C’s.

Speak Your Mind