Glossary · Reading the business
In short
The five critical factors lenders assess when evaluating a loan application: Character, Capacity, Capital, Collateral, and Conditions. Understanding these helps you prepare a strong application.
Lenders use the 5 Cs framework to determine your creditworthiness and the viability of the loan. You need to demonstrate good Character (credit history), strong Capacity (cash flow to repay), sufficient Capital (your equity injection), adequate Collateral (business assets), and favorable Conditions (market, economy). Prepare your financials and personal statements to clearly address each.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Defined by DealRoom.so SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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