A proposed project usually requires both risk capital from members and debt capital from banks and/or other financiers to become operational. Lenders typically require an objective evaluation of a project when they consider a loan investment, and a feasibility study often provides the first look at those aspects. While some groups often try to involve a lender early in the process, a feasibility study is often conducted with an eye toward explaining the project to potential financiers. Lenders have different requirements from the study than group members. Lenders are most interested in the project's ability to pay back loans while group members are interested in the benefits to them of using the cooperative.

Many groups work with lenders with whom they have an established personal or business relationship. This may expedite the process of obtaining financing. Nevertheless, the lender must know and understand the unique aspects of cooperatives and fully understand the characteristics and potential of a proposed project. The feasibility study will help them in this regard.

Lenders' primary concerns focus on repayment, their risk exposure, and a project's strengths and weaknesses. Lenders classify these concerns into the "5-C's":

• Capacity-what is the group's ability to repay the loan?
• Capital-what assets are being financed with the loan and how much is requested?
• Character-who are the principals of the project? What is their background?
• Collateral-what is being used to secure the loan? How is it valued?
• Conditions-what additional factors can affect the loan?

The odds for financing diminish if a lender does not fully understand the project and is unable to review the potential financial results through a sound economic and financial analysis. Success or failure of a business opportunity often hinges on obtaining adequate lender financing. For this reason, it is often a good strategy, if possible, to consult with potential lenders prior to conducting a feasibility study to determine what factors they will focus on given the type of project. Such a consultation can shorten the time that a lender needs to approve project financing, or even improve the ability of securing financing. However, while a feasibility study is important for providing information that will help in gaining finances from a lender, it should not be conducted merely to prove to them that a project is viable. It must only be undertaken when the proposed project is being seriously considered for implementation by dedicated potential members.