Course

Evaluating and Structuring Commercial Loans
A Decision Tree Approach that covers the commercial lending process and the related financial analysis of a borrower.

This program, all five “levels” described below, can be purchased as a whole or individually.

Description: This program involves a mix of qualitative and quantitative skills that cover over five levels with each level having four or five courses of instruction. To accelerate learning, each course has a pre-test to allow the elimination of subjects where the learner demonstrates sufficient knowledge. This curriculum also includes a comprehensive glossary of terms and job aids that are valuable references to download and print throughout the series of courses and back on the job. This curriculum focuses on commercial and industrial lending (C&I), and excludes commercial real estate or investment properties

Audience: Commercial and/or Business bankers and Credit Analysts

Learning Objectives: The objectives are listed below under each Level.

Credit: AIB: 2.5; ICB: 39.25 CLBB

Price:  CBA Member: $500.00  Nonmember: $665.00

NOTE: Each Level will take approximately 6 – 7 hours to complete, and you have six months from the registration date.  If you register for the bundle, you will have six months to complete all courses.  If you purchase individually, you will have six months for each level.

Level 1: Understanding Business Borrowers

Description: Level 1: Understanding Business Borrowers focuses on understanding business industries and types, plus why they borrow money. It also introduces basic concepts of business financial accounting and entity structures.

Audience: Commercial and/or Business bankers and Credit Analysts 

Learning Objectives: The courses included in the Level 1: Understanding Business Borrowers Curriculum and their objectives are listed below:

Business Sectors and Operating Cycle

  • Explain the operating cycles of various business industries
  • Analyze the financial data and evaluate the risks of the different industries

Why Businesses Borrow

  • Explain how a firm’s cash flow cycle can affect debt requirements and repayment sources
  • Identify the reasons businesses need to borrow
  • Identify the various borrowing arrangements used to structure a business loan
  • Describe the way alternative lending sources compete with or complement community banks

Business Legal Structures and Life Cycles 

  • Define the basic types of legal structures available to a business
  • Describe the general characteristics of the four stages in the business life cycles

Introduction to Business Financial Statements

  • Describe the financial statement analysis process
  • Describe basic guidelines for preparing a spreadsheet and analyzing the data
  • Identify and evaluate a borrower’s financial strengths, weaknesses, and uncertainties
  • Explain the different types of financial statement preparation
  • Describe the other components associated with financial analysis

How Business Financial Statements are Constructed (Accounting Refresher)

  • Compare and contrast the cash method and accrual method of accounting
  • Construct a balance sheet and income statement on the accrual basis for an example business

Credit: AIB: .5; ICB: 8 CLBB

Price:  CBA Member: $150.00  Nonmember: $200.00 

Level 2: Analyzing Business Financial Statements and Tax Returns

Description: Level 2: Analyzing Business Financial Statements and Tax Returns covers the analysis of business financial statements and tax returns, including cash flow statements.

Audience: Commercial and/or Business bankers and Credit Analysts

Learning Objectives: The courses included in the Level 2: Analyzing Business Financial Statements and Tax Returns Curriculum and their objectives are listed below:

Income Statement Analysis

  • Explain the components of revenue and cost of goods sold
  • Describe operating expenses and net profit analysis

Balance Sheet Analysis

  • Identify balance sheet considerations
  • Describe the different types of assets—current, other, and noncurrent
  • Explain the components involved in a liability and equity analysis

Ratio Analysis

  • Describe the considerations a lender needs to take into account when using ratios to evaluate
  • financial performance
  • Identify, calculate, and interpret liquidity, financial leverage, profitability, efficiency, and debt
  • coverage ratios
  • Explain how to use industry data when performing a ratio analysis

Cash Flow Analysis

  • Identify cash flow statements and reports
  • Describe the two dominant types of cash flow reports—indirect and direct method
  • Explain the direct method for operating activities and the importance of pro forma and cash budgets

The UCA Model

  • Compare the formats of the banker-prepared UCA cash flow model and the accountant-prepared statement of cash flows (SCF)
  • Construct a UCA model and interpret the results
  • Explain the advantages of the UCA model

Cash Budgets and Pro Forma Statements

  • Provide a description of a cash budget
  • Explain the purpose of a cash budget
  • Describe why a cash budget is a critical tool of financial statement analysis
  • Identify key financial information in the cash budget format
  • Analyze the cash budget to determine the effect on the operating cycle, working capital, and capital expenditures

Credit: AIB: .5; ICB: 8 CLBB

Price:  CBA Member: $150.00  Nonmember: $200.00

Level 3: Analyzing Personal Financial Statements and Tax Returns

Description: Level 3: Analyzing Personal Financial Statements and Tax Returns moves into personal financial statements and tax returns, including combining business and personal cash flows into a global analysis.

Audience: Commercial and/or Business bankers and Credit Analysts

Learning Objectives: The courses included in the Level 3: Analyzing Personal Financial Statements and Tax Returns Curriculum and their objectives are listed below:

Types of Personal Financial Statements

  • Describe the basic formats for personal financial statements
  • Identify the information that is reviewed and verified prior to analyzing the personal financial statement

Key Ratios and Adjusted Net Worth

  • Calculate and interpret the liquidity ratio, unsecured debt ratio, and debt-to-income (DTI) ratio
  • Perform an analysis using ratios to determine a personal financial condition
  • Describe the components of adjusted net worth
  • Use adjusted net worth to perform an analysis of key personal asset and liability accounts

Personal Tax Returns and Cash Flow

  • Describe the key components of a personal tax return
  • Use tax return information to develop a personal cash flow

Combining Business and Personal cash Flow into Global Cash Flow

  • Explain why global cash flow is critical when making credit decisions
  • Develop a global cash flow and global DSC for a borrower

Credit: AIB: .5 ; ICB: 7.25 CLBB

Price:  CBA Member: $150.00  Nonmember: $200.00

Level 4: Qualitative Analysis and Determining a Credit Risk Rating 

Description: Qualitative Analysis and Determining a Credit Risk Rating covers qualitative analysis and how to assess industry risk, market risk and management risk. It also provides an understanding of the role of loan policy and the need to summarize the borrower’s various risks into an appropriate credit risk rating.

Audience: Commercial and/or Business bankers and Credit Analysts.

Learning Objectives: The courses included in the Level 4: Qualitative Analysis and Determining a Credit Risk Rating Curriculum and their objectives are listed below:

The Commercial Lending Process and Initial Business Development Calls

  • Explain why the commercial lending process is necessary
  • Recognize the process and types of information business bankers should acquire during a business development call

Credit Investigation and Assessing Industry, Market and Management Risk

  • Explain the importance of a credit investigation and describe what it entails
  • Identify industry, market, and management risks that can affect a borrower

Loan Policies and Procedure, Including Credit Risk Ratings

  • Describe how a bank’s organizational structure affects the lending function
  • Identify the key elements of a credit risk rating
  • Describe the loan review process as an independent validation of risk ratings and other commercial lending issues

Loan Packages and Credit Write-Ups

  • Identify typical components of a commercial loan package and memorandum
  • Describe the simpler format, timing, and administration of annual reviews for commercial loans

Credit: AIB: .5; ICB: 8.0 CLBB

Price:  CBA Member: $150.00  Nonmember: $200.00

Level 5: Loan Structuring, Documentation, Pricing and Problem Loans 

Description: Loan Structuring, Documentation, Pricing and Problem Loans completes the lending process by providing guidance on loan structuring and documentation issues in response to the analysis of the quantitative and qualitative risks. This will include an overview of key documents, loan agreements and covenants, as well as negotiating and pricing. This Level concludes with an introduction to problem loans.

Audience: Commercial and/or Business bankers and Credit Analysts.

Learning Objectives: The courses included in the Level 5: Loan Structuring, Documentation, Pricing and Problem Loan Curriculum and their objectives are listed below:

Commercial Loan Structuring

  • Identify borrowing structures and describe their advantages
  • Explain the purpose of commercial loan support

Identifying Viable Secondary and Tertiary Sources of Repayment

  • Identify sources of repayment that are appropriate for various commercial loan borrowing arrangements and the factors that affect collateral value
  • Explain key issues for assessing various types of collateral commonly used for commercial loans

Key Documents, Loan Agreements and Covenants

  • Describe the loan documentation process and requirements
  • Explain the best practices for loan closing—preparing, conducting, and following up

Loan Pricing and Negotiating

  • Describe pricing considerations for a commercial loan
  • Identify and explain the loan negotiation process
  • Explain the role of the business banker in the loan negotiation

Problem Loans

  • Identify the costs and causes of problem loans
  • Detect problem loan warning signs
  • Explain the steps in resolving a problem loan
  • Describe the solutions to problem loans—rehabilitation, liquidation, and bankruptcy

Credit: AIB: 0.5 ICB: 9.0 CLBB

Price:  CBA Member: $150.00  Nonmember: $200.00

Commands