Loan Underwriting

Allowance Model

Bend Don’t Break

The economic impact of the current healthcare driven crisis is obvious when one looks at the most recent economic data.  What isn’t obvious, however, is how the current crisis will impact loan losses for lenders, including CDFIs and community banks.  We …

COVID-19

COVID-19 and The New Normal

The last 7 days have been quite unlike anything we’ve ever faced during our years in banking.  We understood the why and the how of the Great Recession twelve years ago.  The contagion then was banks and well, we are bankers.  But …

Loan Documentation

Loan Documentation: The Last Line of Defense

For both a lender and a borrower, the loan application, underwriting and approval process can be stressful for any number of reasons.  There is a sense of relief and accomplishment when the loan is approved.  However, the potential for credit risk …

5 C's of credit

When Does Character Count?

When it comes to the 5 C’s of credit, character always counts. What should a lender do when a borrower exhibits questionable character? Is there wiggle room to ignore certain character flaws and not others? …

Asking the right questions

Not All Questions Are The Same

A client asked us to underwrite a loan to a wedding planner.  The Borrower was an S-corporation that helps couples find all the vendors for a wedding (DJ, catering, florist, photographer, etc.). While we were reviewing the application, we …

Financing Sales Growth

Financing Sales Growth

Financing sales growth typically involves assessing projections due to geographic expansion, capital investment in new equipment, expanded services or investment in talent. No matter what the combination of factors that will drive a company’s expansion, the risk in …

Declining a commercial loan

When To Say No: Declining a Commercial Loan

Earlier this year we discussed prospect screening. A good screening process will help to weed out prospective Borrowers that don’t fit your institution’s credit risk profile. But, these processes aren’t perfect. How can declining a commercial loan …

Seasonal Business

Lending to a Seasonal Business

What are the challenges in lending to a seasonal business?

Lending to a seasonal business brings with it challenges that a borrower that operates all year long doesn’t face. Whether lending to a hotel in a coastal summer hotspot …

Customer Selection

Sorting the Good Prospects From the Bad

Many lenders consider some form of pre-underwriting or executive summary as a way to help lenders sort out good prospects from the less desirable prospects. If your institution hasn’t implemented a customer selection process what can you do? …

income-statement-projections

Income Statement Projections

What do you need to consider when relying upon projections for a loan approval?

A lender engaged Abacus Credit Analytics to underwrite a loan for a new children’s therapeutic gymnasium. (We had to educate ourselves as to what exactly …