Name: Marthaley Mhericka C.

Silva BSHRM-1 Sub: HOSM111B

Activity for Sources and Uses of Short-term Funds

1. Enumerate the 5C’s of credit (EASY)

Ans: The 5C’s of credit are Character the willingness of the borrower to repay the loan.
Capacity a customer’s ability to generate cash flows. Collateral security pledged for payment of
the loan. Capital a customer’s financial resources and Conditions current economic or business
conditions.

2. What do you think is the most important consideration of banks in approving a loan?
Ans: I think the most important is Character therefore the first consideration in making a loan
decision. Determining one's character is to determine the borrower's willingness to repay the loan
a credit bureau report reflecting your past payment history is often used to establish character.

3. Why is it important for banks to collect all the loan requirements? Which requirements are
meant to be used to evaluate each of the 5C’s of credit?
Ans: It is important for banks to collect all the loan requirements because doing this helps ensure
that your financial situation has been thoroughly vetted and will helps show lenders that you are
serious about getting a loan and qualifying on your own merits. Lenders will verify any down
payment funds you contribute with their sources, ensuring you haven't used another source of
money as your down payment like withdrawn from retirement savings. Also, to avoid conflicts
and be assured that the borrower will pay its loan and also for the bank to confirm if the
borrower is legit and if ever, he/she cannot pay the bank anymore, the bank will get some of
borrower's asset or the agreed collateral.
The requirements that meant to be used to evaluate is the 5Cs of credit method of evaluating a
borrower incorporates both qualitative and quantitative measures. Lenders may look at a
borrower's credit reports, credit scores, income statements, and other documents relevant to the
borrower's financial situation.