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Credit Curriculum

III. Credit Curriculum: Credit Decision - Overview

... credit analysis for good and bad times

These three courses provide a thorough and highly detail exploration of the construction and interpretation of the Uniform Credit Analysis (UCA) cash flow statement; a review and application of cash impact methodology in computing the cash impact from movements in key Business Drivers and, consequently, in fully explaining the UCA cash flow statement: and a review of the competitive forces at work in a borrower's market, an examination of management essentials that must be in place and working effectively, and an assessment of the impact competitive forces and management capabilities will exert on Business Driver performance in generating future cash flow to service interest-bearing debt.

Target Audience

The three Fundamentals courses are designed for analysts and lenders new to commercial lending.

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To see more detail on each session, click the session links below.

Description
1. Guarantor Support and Global Cash Flow
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... cash support in a crisis
In this self-study course, participants work through the step-by-step construction of a personal cash flow statement. They assess the information provided by the statement about the guarantor's dependency on business cash sources to support and sustain the guarantor's life style and personal debt obligations. They identify the ready cash support from the guarantor and assess the financial value of the guarantee in a business cash flow crisis from either personal cash flow or liquid personal assets. In addition, they explore the use and limitations of incorporating potential sources of cash support from all related parties within a global cash flow framework of analysis.
2. Risks and Mitigants
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... identify and contain
In this self-study course, participants review and examine an array of non-financial red flags and assess their possible impact on a borrower's profit and cash flow performance should they emerge. They estimate the cash liquidation value of pledged business collateral at different time periods in the future under differing assumptions about the use and application of a borrowing base. They identify the relevant risks to a borrower's primary, secondary, and tertiary cash sources of debt service based on all prior analysis and available information, and they apply specific loan covenants - if possible - to mitigate each of the relevant risks to the cash sources of interest-bearing debt service.
3. Loan Structure, Loan Documentation, and the Credit Write-Up
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... structure, document fully, present succinctly
In this self-study course, participants identify all elements of loan structure that properly apply to specific credit requests from a borrower. They examine the manner in which loan structure addresses relevant risks to cash repayment sources and identify the loan documentation necessary to fully capture all agreements between borrower and lender as well as assure the lender's access to cash support from a guarantor and unimpaired access to pledged business collateral in the event of default. They identify and address each of the four critical issues in every credit write-up and provide the most persuasive reasons for approving the credit requests, the most persuasive reasons for declining the credit requests, and the decisive reason for recommending approval of the credit requests.