Non-Financial Red Flags and Performance Implications
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In this 6th course of the Commercial & Industrial Business Underwriting Skill Series, participants will explore financial vs. non-financial red flags, assess their impact on borrowing and repayment risks, and identify possible mitigants to limit these risks using financial statements and borrower information.
Certificate
1 credit or $295
Cost
1.5 - 2 Hrs.
Duration
1 hr.
Prep Time
1
Quiz
Overview
In the sixth webinar session, participants explore the distinction between financial and non-financial red flags. They review and assess the significance of numerous non-financial red flags that borrowers frequently encounter. They examine specific financial statement information, borrower background information, and borrower comments to identify non-financial red flags and trace their existing and potential impact on borrowing causes, cash sources of repayment, and risks to cash repayment sources. In addition, participants explore possible mitigants that may be put in place to limit the risks from non-financial red flags.
Who Should Attend
This Course is ideal for participants currently in or aspiring to enter the following job functions:
- Credit Management
- Commercial Credit Administration
- Commercial Loan Portfolio Management
- C & I Lending
- Loan Review
- Special Assets
- Credit Analysis
Prerequisites
Some familiarity with an accrual income statement and balance sheet for a commercial business, as well as completion of prior sessions in the Credit College.
Objectives
By the end of the webinar session, participants will be able to:
- Identify the distinction between financial and non-financial red flags.
- Identify the existing and potential impact on borrower performance from a series of non-financial red flags that borrowers frequently encounter.
- Identify the most useful and reliable sources of information about non-financial red flags, such as the borrower, the borrower's financial statements, and the borrower's suppliers and competitors.
- Identify specific non-financial red flags based on borrower background and borrower financial statements and trace their existing and potential impact on borrowing causes, cash sources of repayment, and the risks to cash repayment.
- Identify non-financial red flags that emerge from an interview with a borrower and trace their existing and potential impact on borrowing causes, cash sources of repayment, and risks to cash repayment sources.
- Identify possible loan covenants that may be imposed by the lender to contain or eliminate the risks represented by specific non-financial red flags.
Materials(access provided with registration)
- Credit Refresher on Non-Financial Red Flags
- Financial Statements and Background Information for Sacramento Distributors, Inc.
- Financial Statements for Total Coverage, Inc.
- Transcript of Follow-Up Call on Larry Crevin
- Exercise for the Session 6 Webinar
- Webinar Presentation Slides
- Webinar Poll Questions
- Webinar Poll Solutions
- Exercise Solutions
This is Course 6 of 8 in the Commercial & Industrial Business Underwriting Skill Series
Analytical Decision Tree and the Credit Write-Up
Financial Statement Review and Ratio Analysis
Cash Flow Analysis and Borrowing Causes
Projected Cash Flow, Management Assessment and the First Way Out
Guarantor Analysis and the Second Way Out
Non-Financial Red Flags and Performance Implications
Identifying and Mitigating Repayment Risks
The Credit Write-Up Again
