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The Commercial Corner: The Five Cs of Lending … With a Twist

Mike Boggiano
Mar 21, 2016

In the mortgage business, lenders determine creditworthiness based on a number of factors related to a borrower’s financial situation. Often referred to as the “Five Cs,” these fundamentals are described as:

1. Character: A subjective measure of the borrower’s willingness and ability to repay the loan, taking into consideration the borrower’s credit and financial strength.

2. Capacity: A financial evaluation of the borrower’s ability to repay the loan.

3. Capital: The amount of money invested in the business or property.

4. Collateral: The asset securing the loan or additional forms of security, including guarantees provided to the lender.

5. Conditions: The loan purpose and use of loan proceeds.

A wide variety of lenders incorporate a version of the Five Cs into their borrower assessments. While a particular lender may consider one “C” to be more important than another, a borrower can typically expect all five to factor into their general evaluation.

But why should lenders be the only ones who get to evaluate their clients? Let’s flip the concept for a moment, to a mortgage broker considering a potential lender partner. You can apply a similar approach, with a different set of Cs, to the due diligence process when evaluating prospective lender partners. Here are “Five Cs” to consider:

1. Credibility: The lender’s history of funding loans. Are they experienced or are they new to the marketplace? What is their reputation (don’t be afraid to ask for references)? Are they well-capitalized to fund their loans?

2. Certainty of execution: Following timelines and guidelines to demonstrate the ability to close transactions in a reliable, consistent manner. Plainly stated … do they do what they say they’re going to do, when they say they’re going to do it?

3. Consistency of underwriting: Well-defined guidelines that are transparent and consistently applied, rather than a new approach to every transaction.

4. Customer experience: A positive experience as supported by testimonials, which indicates that the lender treats and values the client relationship in a manner consistent with your expectations.

5. Continuity: From the senior management team to sales team, the more history together, the better the indication that there is harmony within the organization and a productive lending platform, not to mention an environment more conducive for a favorable customer experience.

Think about the best lender partners you have worked with over your career. Do they score high marks in the Five Cs above? Probably. Perhaps this exercise even brings to mind some not-so-great lenders, and a “C” or two where they fell short. If you measure prospective partners against these Cs, you will quickly discover which lender best suits your specific needs.

A final thought about another important C: Clients. Your client relationships make up the foundation of your business. As a mortgage professional, you want to work with a lender who values relationships the same way that you do. When you can find that alignment, with the right partner and program for your borrower, it’s a grade-A match.

Michael Boggiano is national sales manager for Silver Hill Funding, a small-balance commercial mortgage lender offering nationwide financing from $250,000 to $1 million. He may be reached by phone at (888) 988-8843 or e-mail

This article originally appeared in the December 2015 print edition of National Mortgage Professional Magazine.

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