credit proposal preparation,

Syeda Mustajab Zahra

CREDIT APPRAISAL

Credit appraisal means an investigation/assessment done by the bank prior before providing any loans & advances/project finance & also checks the commercial, financial & technical feasibility of the project proposed.

Proper evaluation of the customer is preferred which measures the financial condition & ability to repay back the loan in future

Credit appraisal is the process of appraising the credit worthiness of the loan applicant

Credit Proposal Preparation

“A proposal may function in at least 3 ways: as a means of communication, as a plan, and as a contract.

• Goal & Objective • project finance• Object finance• Commodities finance• Finance of income-producing

commercial real estate

Thus, four factors should be taken into account in the segmentation of credit

approval processes:

1. type of borrower

2. source of cash flows

3. value and type of collateral

4. amount and type of claim

4 Steps in the rating process

Creating a Detailed Proposal

Background

Management

product

Market

Production

Final performing

Financial outline

Banker

Team lender

Venture capital firm

Mortgage

lender

Credit Proposal preparationPreparation of Offers, Credit Decision, and Documentation

Setting up Specific Loan Loss Provisions

Valuation of Collateral

Risk Provisions

Design of the Workout Process

Design of the Restructuring Process

Transfer to the Workout Process

Transfer to the Restructuring Process

Transfer from Standardized Servicing to Intensive Servicing

Credit Disbursement Check

Internal Documentation and Credit Agreements

Other Possible Stipulations of Decision-making Structures

• Business focuso a mission statement describing the purpose of your business• List of your specific productso what products your business will offer your customerso choose tangible products rather than services• Market analysiso target demographics – who will be interested in your producto market place – what other players are in your area of business• Expected cash flowo how much revenue will you generateo how much money will you spendo when will your business become profitable• List of partnerso who’s going to work with youo what are their qualifications

Debt Equity Ratio Debt Service Coverage Ratio

Concept Proportion of Debt fund of a company in relation to its equity

FormulaLong Term Debt

Tangible Net worth

CommentsThis ratio is an indicator of leverage

of a company It measures a company’s

ability to borrow and repay money

Concept The amount of cash flow

available to meet annual interest and principal payments

FormulaNet Operating Income

Total Debt Service

CommentsDSCR less than 1 means negative

cash flows

MEASURES

Benefits

Employees will be motivate.

Communication will be improve.

Technical issues will be solve.

Better services.

Productivity

Brand

Questions ?