There's a lot to consider in a loan application. Find out what affects that final decision.

• Factors considered 
• Equifax 
• 5 Cs of credit 
• 4 Ms of commercial credit  

FCC lending decisions are based on factors including:

• Prior credit history
• Repayment ability
• Security

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An Equifax report is a key indicator of credit history and is used to determine your credit rating. You can get a free hard copy of this report by calling 1-800-465-7166, or access your report (for a fee) at www.equifax.ca

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The 5 Cs of credit are key considerations in all primary production loans:

Character - An assessment of both the experience and capacities of the business' management personnel is critical. We consider:

• planning skills and experience
• financial skills
• credit history
• integrity

Capacity (repayment ability) - Capacity addresses the past financial performance of the enterprise, a prime indicator of its future viability and the likelihood of loans being repaid in an orderly manner. We consider:

• past and projected financial performance
• outside (off-farm) income

Commitment - The commitment of the owners of the enterprise is crucial to its success. We consider both financial and non-financial commitment to the business.

Collateral - Collateral provides the secondary source of repayment. To ensure adequate coverage for the loan, we look at:

• available security and its value
• commitment to other lenders

Conditions - To assess the future viability of the enterprise and determine risk, we evaluate:

• legislation that could affect the industry
• market conditions
• current and potential economic impact
• potential environmental impact

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For commercial AgValue loans, the 4 Ms of commercial credit are key:

Management
We consider the overall experience of the owners/management:

• succession planning
• employee training and loyalty
• financial management history
• reporting systems
• financial capacity (net worth and financial history)

Markets
Long-term viability of a business depends on:

• market acceptance
• stability of demand
• vulnerability to the competition
• market size
• sales terms (reputation of purchasers, restrictions on cash flow, collection strategy)

Money
This area includes the company's financial position and planning:

• working capital and liquidity position
• other liabilities and contingencies (could include guarantees or pending law suits)
• company's debt/equity position and debt service
• commitment of retained earnings
• earnings history
• shareholders' loan performance
• planned changes and their effect
• the amount and purpose of the loan and its terms
• estimated value of security

Materials/methods
We evaluate all aspects of production and available product:

• inventory
• source of supply
• length of the manufacturing period
• capital invested in works in progress
• nature of costs
• nature of fixed assets
• potential impact of the regulatory environment and environmental regulations

In addition to all these factors, we look at other variables before making a final decision.

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