Some aspects of business evaluation in SCAs
The classical guide of a loan is based on the four "C"-s: character - is the solicitor's reputation adequate? and is the business solvent to receive the loan?
capacity - are the solicitors' resources adequate? and is the cash flow sufficient to reimburse the credit?
capital - is the solicitor's capital suitable to implement a business project ?
collateral - does the solicitor have adequate goods to secure the loan ?
The process of granting a loan is similar to renting a car, equipment or other property. The institution which provides loans receives back a payment in the form of interest rates. The similarity is important because it draws the attention on the fact that money similar to the car or other rented property, have to be returned when the term expires. Default is the loss for the institution which provided financial resources, but not necessarily for the loan beneficiary -he/she may have the money to reimburse , but still due to various reasons chooses to declare default. The impact for the money provider is significant.
To lend money is easy, the difficult thing is to receive them back. Loans should be provided only if there were no doubts on the fact that the money will be reimbursed. Institutions which grant loans have to think of the same thing when they evaluate a loan request.
The manual was developed: with the support of the Department for International Development of Great Britain and the company Landell Mills Management Consultants. The publication of the manual was funded by USAID project BIZPRO-Moldova.
The manual is available only in Romanian.
