對酥竹贸易本孝 1951 Chapter 10 Evaluating Commercial Loan Requests
Chapter 10 Chapter 10 Evaluating Evaluating Commercial Loan Commercial Loan Requests Requests
Fundamental credit issues Regardless of the type of loan,all credit requests mandate a systematic analysis of the borrower's ability to repay. When evaluating loan requests,bankers can make two types of errors in judgment. Extending credit to a customer who ultimately defaults. Denying a loan to a customer who ultimately would repay the debt. In both cases,the bank loses a customer and its profits are less. 行贺影小号
Fundamental credit issues Fundamental credit issues Regardless of the type of loan, all credit requests mandate a systematic analysis of the borrower’s ability to repay. When evaluating loan requests, bankers can make two types of errors in judgment. Extending credit to a customer who ultimately defaults. Denying a loan to a customer who ultimately would repay the debt. In both cases, the bank loses a customer and its profits are less
Five fundamental issues Five fundamental issues ■ Character and data quality ■ Use of loan proceeds ■ Loan amount ■ Source and timing of repayment Collateral In addition to these issues,credit analysis should examine risks that are unique to each loan. Quality of mgt;the soundness of the business; sensitivity to economic conditions;the firm's relationship with other creditors;etc. 碰封醉行贸易大孝
Five fundamental issues Five fundamental issues Five fundamental issues Character and data quality Use of loan proceeds Loan amount Source and timing of repayment Collateral In addition to these issues, credit analysis should examine risks that are unique to each loan. Quality of mgt; the soundness of the business; sensitivity to economic conditions; the firm’s relationship with other creditors; etc
Character and quality of data The foremost issue in assessing credit risk is determining a borrower's commitment and ability to repay debts. An individual's honesty,integrity,and work ethic typically evidence commitment.For a business, commitment is evidenced by the owners and senior management. Whenever there is deception or a lack of credibility,a bank should not do business with the borrower. It is often difficult to identify dishonest borrowers. The best indicators are the borrower's financial history and personal references. 的资5土号
Character and quality of Character and quality of data The foremost issue in assessing credit risk is determining a borrower’s commitment and ability to repay debts. An individual’s honesty, integrity, and work ethic typically evidence commitment. For a busines s, commitment is evidenced by the owners and senior management. Whenever there is deception or a lack of credibility, a bank should not do business with the borrower. It is often difficult to identify dishonest borrowers. The best indicators are the borrower’s financial history and personal references
Use of loan proceeds Loan proceeds should be used for legitimate business operating purposes Speculative asset purchases and debt substitutions should be avoided. The true need and use of the loan proceeds determines the loan maturity,the anticipated source and timing of repayment, and the appropriate collateral. One common pitfall is to focus too much on collateral and end up financing a firm's long-term needs with short-term notes. 藏的黄香大孝
Use of loan proceeds Use of loan proceeds Loan proceeds should be used for legitimate business operating purposes Speculative asset purchases and debt substitutions should be avoided. The true need and use of the loan proceeds determines the loan maturity, the anticipated source and timing of repayment, and the appropriate collateral. One common pitfall is to focus too much on collateral and end up financing a firm’s long-term needs with short-term notes