Credit proposal preparation by z ara
Transcript of Credit proposal preparation by z ara
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
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