5. Determine MMC's ability to service the debt. 

6. Identify the company's strengths and weaknesses. 

7. Based on the above analysis, describe your recommendation for the requested loan. To answer this question, consider the various critical factors, which are known as the Cs of Credit, specifically: 

a. Character - this factor refers to the borrower's honesty and trustworthiness. What is the assessment of the borrower's integrity and intent to repay? Are there any serious doubts? 

b. Capacity - it involves both the borrower's legal standing and management's expertise in maintaining operations so the firm or individual can repay its debt obligations. Does the company have identifiable cash flow or alternative sources of cash to repay debt? 

c. Capital - it refers to the borrower's wealth position measured by financial soundness and market standing. Can the firm or individual withstand any deterioration in its financial position?

 

d. Collateral - This is the lender's secondary source of repayment or securityA ss assets of sufficient quality and value to provide adequate support for a loan? 

e. Conditions - This term refers to the economic environment or industry - specific supply, production, and distribution factors influencing a firm's operations. Does the outlook for the economy and industry where a borrower is situated add strength to a loan?