Credit Evaluation School, Sacramento, CA

PAYMENT

• Determine amortization – Do terms match the purpose? – Reasonable? • Do terms match the repayment source or cashflow of the borrower? • Primary and secondary sources of repayment should be identified – Guarantors, cosigners • Assess financial/operating needs, debt service capacity, performance, etc.

PROTECTION – Is the loan secured with collateral? – If so, what documentation perfects the collateral to our loan? –What is the value of our collateral, who valued it, how recently, and how did they value the collateral? –How often does management inspect the collateral?