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Loan Presentation Information
Example
Borrower:
ABC Distributor, Inc.
Nature of Business:
Wholesale Beer Distributor for Anheuser-Busch
Commitment Requested:
Purpose of Credit:
1. Increase Revolving Line of Credit to $600,000
(Maximum: 50% of A/R + 50% of Inventory)
Working capital to support
inventory needs
Collateral Description:
Pricing:
Inventory, Accounts Receivable
Prime + 1%
Method of Repayment: Both Loans
Loan Covenants: Both Loans
Primary: Cash Flow from Operations
Second: Sale of assets
1. Current Ratio = 1.5 or greater
2. Debt ratio (TL/TA) = 50.00% or less
Guarantor: Owner and spouse—Sam and Chris Smith
Existing Relationship: company checking account: average 1 year balance = $300,000
Sam/Chris checking account: average 1 year balance = $1,000
Loan Experience:
Loan
Line of Credit
Equipment Loan
Mortgage
Commitment
$400,000
$1,000,000
Outstanding
$200,000
$_______
$5,000,000
$_______
Pricing Comments
Prime + 1% Request to increase to $600,000
6%
10 year amortization, 3 year
balloon—-- 24 monthly payments
completed
7%
20 year amortization, 10 year
balloon—36 monthly payments
completed
Financials (Auditor: Ethical Enron Accounting Firm)
Auditor’s Opinion
Year
Current Assets
Current Liabilities
Net Working Capital
Unqualified
12-31-x5
$4,000,000
$2,500,000
$1,500,000
Unqualified
12-31-x4
$5,000,000
$4,000,000
$1,000,000
Unqualified
12-31-x3
$4,900,000
$3,500,000
$1,400,000
Total Assets
Total Liabilities
Equity
$14,000,000
$7,000,000
$7,000,000
$15,000,000
$8,000,000
$7,000,000
$15,000,000
$8,000,000
$7,000,000
Cash
“Friendly” Debt
$400,000
$0
$500,000
$0
$450,000
$0
Net Sales
Depreciation
Net Income
$40,000,000
$480,000
$280,000
$40,000,000
$500,000
$100,000
$37,000,000
$510,000
$150,000
Dividends
Owner Compensation
$0
$200,000
$0
$90,000
$0
$110,000
Current Ratio
Debt Ratio (TL/TA)
1.6
50.00%
1.25
53.33%
1.4
53.33%
Guarantor Personal Balance Sheet: Sam and Chris Smith
Date:
Cost or Market:
November 26, 20x5
Market
Assets
Cash
$10,000
Retirement Acct.
$100,000
Personal Residence
$500,000
Value of Business
$2,800,000
Other (e.g., jewelry)
$10,000
Annual Debt Service: $ 42,000
Liabilities
Credit Card Debt
Mortgage, first
Mortgage, second
Net Worth
$20,000
$400,000
$100,000
$2,900,000
Contingent Liabilities: ABC Dist.
Pertinent Loan Officer Comments:
1. Sales were flat primarily due to problems associated with a change over in computer
systems which resulted in difficulty delivering product to some customers. Sam expects
sales to increase to $47 million next year. Futhermore, Sam expects the Gross Margin to
improve from 23% to 24 % which should improve overall profitability and cash flow
2. ABC distributor was established by Sam Smith in 1990 and has been a loyal customer of
our bank since 1995.