Lending to Small and Medium Size Enterprises (SME’s)
Length: 2 Days
Course Goal
The credit crisis has demonstrated that lenders need to get back to the basics. Credit scoring models don’t repay loans, they need to be supplemented by a common sense approach. The lender should know the borrower, understand their business and cash cycle, know why they need to borrow and how they plan to repay.
This course focuses on understanding the needs of small to medium size enterprises (SMEs). Participants learn to evaluate the credit worthiness of these enterprises, often in circumstances where they are dealing with unreliable or inadequate financial information.
Course Objectives
Participants will learn to:
- Identify the key elements that are used to derive a credit score
- Evaluate a Dunn and Bradstreet report
- Explain different corporate structures including: C Corporations, S Corporations, Partnerships, and Sole Proprietorships
- Identify key accounts on the tax returns
- Develop questions to ask about the accounts and trends on the tax returns
- Describe macroeconomic factors that affect a business and its ability to repay a loan
- Evaluate business, industry and management risk elements and their effect on loan repayment
- Develop questions to ask about trends in the accounts on the financial statements
- Analyze key ratios including liquidity, leverage, asset management, profitability and coverage ratios
- Explain the cash conversion cycle
- Construct and analyze cash flow statements
- Identify the key elements of a global cash flow
- Construct and analyze projected cash flow statements
- Identify early warning signs of problems loans
- Evaluate the risks associated with lines of credit, term loans, permanent working capital loans, and owner occupied real estate transactions
- Describe the key elements used to structure a loan
- Present their loan recommendations before a mock loan committee
Format
The FTG approach is to customize all materials and case studies to reflect the lending environment actually experienced by the participant. Lecture and discussion, supplemented by group exercises and role play keep the course both fast paced and interesting.
Who Should Attend?
This course is appropriate for anyone who works in commercial or middle market lending including: Senior Lenders, Commercial Lending Officers, Relationship Managers, Portfolio Managers, Financial Analysts, Underwriters and Loan Review personnel.
