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The following information is provided to clients who are seeking assistance with
financing from a commercial bank, mortgage company, SBA lenders, Business Development
Finance Corporation and other forms of micro loan programs available.

Each of the above lenders bases credit decisions on the evaluation of the following five (5) "C"s that
pertain to the loan applicant. These 5 "C"s are defined as follows:

1. Character
This is the first evaluation by a lender in reviewing a loan request. The applicant is evaluated on the
basis of how well the person(s) has handled his/her personal and business credit in the past with
other creditors. As part of the lenders' requirements, personal credit reports will be ordered and
analyzed by each and every lender. Individuals may order these reports from several reporting
agencies, including TRW, Experian, Equifax and others through Credit Data Southwest, P.O. Box
2070, Phoenix, AZ 85001 at 602-528-7785 or through www.experian.com/yourcredit.

To properly provide client assistance with potential business loans, most ask that each business
owner share a copy of his/her personal credit bureau report with the lender. This information will
remain confidential. If a business loan is not being sought, and the purpose is to get an investor
interested, this information is usually not requested.

2. Capacity
This is the second evaluation by a lender. The evaluation is based on the ability to repay the full
amount of the loan request within a reasonable time period on agreeable loan pricing, terms and
conditions. This will include a full "cash flow analysis", based on combined business and personal
income resources less total expenses. This requires the applicant to provide copies of the following:
business financial statements for three years; personal and business income tax returns for the past
three years; a current interim balance sheet and profit and loss statement on the business; current
personal financial statements on the owners. In addition, the lenders will be requiring monthly
projections for at least two - three years.

3. Capital
This is normally ranked as the third most important evaluation. A loan applicant's personal and
business balance sheets will be analyzed to determine the strength and liquidity (cash/near cash
assets), hard assets (real estate, equipment and investments), leverage condition (debt to net worth)
and tangible net worth (minus intangible assets such as goodwill). The historical ratios and trends
will indicate how conservatively and successfully the individual and the business have been in
managing financial affairs. This will also tell the lender how much cash the applicant has available to
invest into the proposed project. Most non-real estate projects require 30% cash infusion from
owners. Real estate projects require lower cash infusions of 10% -20% from owners due to the hard
assets which minimizes the credit risks to the lenders.

4. Conditions
This is usually the fourth assessment in a business loan request. The expertise and management
skills of the owners will be assessed to determine their strengths and abilities to handle a multitude
of risks on a daily basis and long term commitments to successfully operate a business on a
profitable basis. In addition, other risk factors will be evaluated such as the product, market niche,
industry, technology, competition, economy, employment, government and other external conditions
that may affect the business decisions.

5. Collateral
Most lenders will require collateral such as real estate, equipment or liquid assets. The loan
applicant will be evaluated on the length of time that the business has been operating with sustained
profits and cash flow. The amount and purpose of the loan request will also determine the type of
collateral that will be required by the lender. In many cases, the lenders will be interested in using a
second deed of trust (secondary lien) on the owner's personal residence if the business cannot
support the loan request on its own.