Sunita is a loan officer at a bank. She is considering making a loan to a local business, but she is worried about the “conditions” variable of the five Cs of credit risk. What is Sunita worried about?

a. The people who are borrowing the money may not have the legal capacity to borrow in the name of the firm.

b. The firm may not have sufficient cash flow to make regular payments as required by the loan.

c. The market in which the firm is selling may experience a downturn in the near future, making it difficult for the borrower to repay the loan.

d. Laws might change and negatively affect the ability of the borrower to repay the loan.