There's a lot to consider in a loan application. Find out what affects that final decision.
FCC lending decisions are based on factors including:
- Prior credit history
- Repayment ability
- Security
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
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
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.
As part of FCC's loan application process, we will ask you to sign a Customer Declaration. By signing the Declaration, you're telling us that you know of no reason why FCC may have any concern with your business.
Our committed partnership begins with complete disclosure on all aspects of your business. We lend only to individuals with personal integrity and the form helps ensure that we're working in both our best interests.
By signing the Declaration, you're telling us that you know of no reason why FCC may have any concern with your business.
See the Customer Declaration here
If you have questions about the Customer Declaration, please contact: legal_services@fcc-fac.ca
