Evaluating and Structuring Commercial Loans: A Decision Tree Approach


Description: Competition to make commercial loans is fierce, and qualified commercial lenders are critical to your bank’s success. Strong underwriting and analysis skills can help make the difference between banks that can capitalize on these new opportunities, and ones that don’t.

This online curriculum will familiarize lenders with both audited and unaudited statements, and fill any gaps in their understanding of credit analysis. Pre and post-tests allow seasoned lenders to test out, and more importantly, let the industry know they are “credit trained” and ready to bring in new, qualified business.

Level 1: Understanding Business Borrowers

  • Business Sectors and Operating Cycles
  • Why Businesses Borrow
  • Business Legal Structures and Life Cycles
  • Introduction to Business Financial Statements
  • How Business Financial Statements are Constructed (Accounting Refresher)

Level 2: Analyzing Business Financial Statements and Tax Returns

  • Income Statement Analysis
  • Balance Sheet Analysis
  • Ratio Analysis
  • Cash Flow Analysis
  • The UCA Model
  • Cash Budgets and Pro Forma Statements

Level 3: Analyzing Personal Financial Statements and Tax Returns

  • Types of Personal Financial Statements
  • Key Ratios and Adjusted Net Worth
  • Personal Tax Returns and Cash Flow
  • Combining Business and Personal Cash Flow into Global Cash Flow

Level 4: Qualitative Analysis and Determining a Credit Risk Rating

  • The Commercial Lending Process and Initial Business Development Calls
  • Credit Investigation and Assessing Industry, Market, and Management Risk
  • Loan Policies and Procedure, Including Credit Risk Ratings
  • Loan Packages and Credit Write-Ups

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

  • Commercial Loan Structuring
  • Identifying Viable Secondary and Tertiary Sources of Repayment
  • Key Documents, Loan Agreements and Covenants
  • Loan Pricing and Negotiating
  • Problem Loans