On the December 2, 2021 Startup Women Podcast, sponsored by the Business Development Bank of Canada and Scotiabank, Alida Pellegrino shared what factors the bank considers when assessing loan applications, how to avoid overleveraging your business, and the 5 C’s of credit. She also shared some advice on small business loans and the importance of women entrepreneurs understanding their finances.
Key topics covered in this podcast:
- The key considerations for a business owner and the bank when considering a loan request
- The different types of borrowing and determining the best product for your business
- The components looked at when accessing loan applications
- How the bank uses all this information to make a loan decision
- How entrepreneurs can determine how much they ask for when applying for credit
- The 5 C’s of Credit when assessing a loan:
1. Character: How do you manage your finances, what is your credit score.
2. Capacity: What is your ability to repay – assessing cashflow and company leverage
3. Capital: What cash balances and other savings/resources do you have to support yourself.
4. Collateral: What is the security supporting deal – Own Name, Real Estate, Liquid Assets etc.
5. Conditions: What will the Bank put in place as disbursement conditions to ensure risk is mitigated
Having worked in the financial services sector for 30 years, Alida Pellegrino is familiar with the biases that women have traditionally come up against — both in the workplace and as business owners. Alida is the VP, Credit Adjudication Canada at Scotiabank and Advisory Board Member of The Scotiabank Women Initiative®.
For further reading into Alida’s detailed insights, check out her article with the Women of Influence.