Broadgate Corporate Finance Blog

What is Character?

Many people often talk about the C's of Credit. Often, the most important C is Character. The question is those, how does one show the correct Character when it comes time for financing?

Characters is much more subjective than any of the other C's of Credit. There is no where to put a number on Character. There is no magic bankers formula that says ABC has 100 character points. It's not like the guy making a net profit of 5% has more character than the guy making a net profit of 6%. Although there is not financial number for Character, it is as important if not more important than anything else in the financing proposal.

Let's think about Character from your lender's perspective. No matter how good the numbers look if I can't trust this company nothing else matters. Thus, when Cheatway Inc. says "That's not how much I really made." It's definitely not gaining any leverage on character. On the other hand when ACE Corp. says "Yes, we actually had less sales that year even though our profit looks better that year," it gains the lender's trust and confidence.

To summarize how should one approach character, just be honest. It's not as hard as any of the other steps to obtaining credit, there is no math to do, etc. Just be honest and forthcoming. Trust me, if there is a character flaw or something else you are hiding your lender is damn well going to find out.

posted by Michael Anders @ 5:55 PM