create a checklist for loan officers processing a commercial loan application
Initial Review
Financial Analysis
- Review the borrower's historical cash flow statements to determine their ability to generate consistent income.
- Analyze the borrower's income sources and stability, considering factors such as industry trends and market conditions.
- Evaluate the borrower's debt obligations, including existing loans, credit lines, and other liabilities.
- Calculate the debt-to-equity ratio by dividing the borrower's total debt by their total equity.
- Determine the current ratio by dividing the borrower's current assets by their current liabilities.
- Evaluate profitability metrics such as return on assets (ROA) and return on equity (ROE) to assess the borrower's financial performance.
- Compare the borrower's projected cash flows with the loan payment obligations to determine if they can meet their financial obligations.
- Consider the borrower's ability to generate additional cash flows from their business operations or other sources.
- Assess the stability and reliability of the borrower's cash flow projections.
- Review the borrower's revenue forecasts and expense projections to assess their reasonableness.
- Consider factors such as market conditions, industry trends, and the borrower's historical financial performance.
- Evaluate the borrower's assumptions and methodologies used in developing the financial projections.
- Look for any signs of financial distress, such as declining revenues, increasing debt levels, or negative cash flow.
- Assess the borrower's credit history and payment track record with other lenders or creditors.
- Consider any legal or regulatory issues that may impact the borrower's financial health.
Use in Manifestly