Understanding and accessing commercial business credit is more important than ever. As businesses navigate economic uncertainty โ and many financial institutions withdraw from industries and types of lending โ itโs important to understand your businessโ options when seeking to access to credit.
For Penn Community Bank customers, the process might look a little different than some of the bigger banks with an emphasis on authentic relationships rather than top-down decisions.
Know Your Five Cs
At the core of our commercial lending process is the framework known as the Five Cs of Credit: Character, Capacity, Capital, Collateral, and Conditions. These principles offer our credit analysts a holistic view of creditworthiness โ allowing lenders and borrowers to go beyond traditional business credit scoring.
1. Character: Although not quantifiable, the reputation of a business and its leadership play a crucial role in credit decisions. In an age of data-driven decisions, the human element remains significant โ especially for a local lender like Penn Community Bank who takes the time to understand individual customers as well as their stories and their needs.
2. Capacity: Cash is king. Itโs important that businesses demonstrate their ability to generate sufficient cash to service their loans. This is where our team can dive into financial statements and projections to ensure a good fit.
3. Capital: We want to know weโre in it together. A strong capital position not only provides a buffer against challenges but also demonstrates the businessโ commitment to its own success. Organizations can even strengthen their creditworthiness by retaining earnings and demonstrating long-term alignment with shared goals.
4. Collateral: Collateral provides security for the loan should the worst happen. Having the collateral โ or personal guarantee โ to back up a loan is critical.
5. Conditions: From economic trends to industry-specific challenges, outside conditions play a significant role in credit decisions. Use this process as an opportunity to evaluate your business and its goals โ ensuring your vision is in line with the market.
The Power of Local
While these principles are utilized broadly throughout the industry, their application is in line with our unique role in the region as a true community bank.
Our deep roots in the region allow us to understand local economies and the businesses and industries that drive them. Our commitment to the community extends beyond lending. We live here, work here, and invest here. Weโre not just assessing numbers on a screen – weโre considering relationships, community impact, and potential.
That connection comes an added benefit: close collaboration between our credit team and lenders. Unlike larger institutions where credit decisions might be made in another state or even by AI, our teams work together in the market, meeting prospects and customers face-to-face throughout the process. In addition to getting a fuller picture of the business and its needs, this also allows for quicker decisions and more creative solutions.
Strength Through Consistency
The reality is that some banks retreat from certain industries or tighten their lending criteria during times of uncertainty. These shifting goal posts impact businesses by not only changing the nature of relationships, but also sending a message of institutional weakness.
The strength of Penn Community Bank comes through loud and clear during these moments because we maintain a consistent presence in the market. Our strong capital position and consistent credit approach allow us to continue serving our communities through both good times and challenging periods. We utilize the same parameters so you know what you can expect from us, even during the unexpected.
Your Credit Partner
We know that no matter what the future holds, successful businesses will be those that understand the foundational principles of credit, adapt to change, and leverage powerful partnerships. Through our relationship-first approach and commitment to sound lending principles, weโre not just working with our lending partners to make loans โ weโre proud to be helping build stronger businesses and communities.
