However, you can change the odds of getting cash when you need it by gaining a clearer understanding of the lending process.

Loan officers will look for at least two sources of repayment and possibly a third. These typically include:

1. Cash flow from operations for short-term loans and continued positive earnings for long-term loans,

2. Collateral, such as a mortgage on fixed assets, accounts receivable or inventory as a backup to the first source, and

3. A personal guarantee, if the lender wants a third source that demonstrates your commitment to your company and its success.

There's another important aspect of the loan application process from the lender's viewpoint. Or shall we say five more important aspects. Loan officers typically investigate whether and how the "five Cs of credit" apply to you. They are:

1. Capacity. This is your ability to meet the financial obligations of the debt based on your personal track record and that of the business. It's a plus if you have experience in the same industry, preferably in management.

2. Collateral. These are the assets you can pledge to support the primary source of repayment.

3. Capital. This is how much equity you have in the business and how much of your own money you've devoted to it.

4. Character. This C simply means how trustworthy you and your business partners (if any) are. Regardless of the financial forecast presented, the loan officer must evaluate the integrity of the owner or owners.

5. Conditions. This is the outlook for the economy and your industry.

You're probably wondering about the other old saying we mentioned in the very beginning. Well, here it is: Forewarned is forearmed. Understand the lending process and be prepared to convincingly explain the five Cs as they apply to your business. Your CPA can help you generate proper financial statements and other materials to support your case.