Webinar: Why Is That Revolving Line of Credit Not Revolving?
March 12, 2024, 3:00 pm - 4:30 pm
Is a revolving line of credit (LOC) meant to be static or dynamic?
What should happen if a borrower’s short-term LOC becomes permanent working capital? Do you understand the asset conversion cycle? Join this insightful webinar to learn the answers to these questions and even more about revolving LOCs for commercial borrowers.
AFTER THIS WEBINAR YOU’LL BE ABLE TO:
- Educate borrowers on the proper use of a line of credit
- Determine the proper amount of a line of credit
- Understand what causes a line of credit to become permanent working capital
- Analyze the asset conversion cycle to determine the impact on borrowings under the line of credit and to properly structure credit facilities
- Identify how much of the line of credit should be converted to a term loan at maturity
WEBINAR DETAILS
How many times have you made available a revolving line of credit for commercial borrowers who borrow up to the maximum credit limit and keep the balance at that point all year? When this occurs, it is often referred to as an “evergreen,” “floored-in,” or “permanent” line of credit – and often frustrates lenders.
To be repaid, financial institutions must convert all or a portion of the LOC into a term loan. LOCs should be used to fund short-term obligations, such as payments to suppliers, payroll, taxes, and other immediate operational needs until the current assets are converted to cash. The conversion of assets to cash, known as the asset conversion cycle or the operating cycle, is key to understanding why that revolving line of credit is not revolving.
This session will examine in detail what causes a borrower’s short-term line of credit to become permanent working capital - whether intentional or unintentional. The presentation will distinguish between the two and provide a deeper understanding of the impact and interrelationship of sales, current assets, profits, cash flow, and creditors on the line of credit.
WHO SHOULD ATTEND?
This informative webinar is designed for credit analysts, branch managers, consumer lenders, commercial lenders, loan review personnel, senior lending officers, senior credit officers, chief financial officers, and senior loan committee members.
TAKE-AWAY TOOLKIT
- List of reasons why revolving lines of credit stop revolving
- Formula to determine the proper amount to offer under a line of credit
- Employee training log
- Interactive quiz
- PDF of slides and speaker’s contact info for follow-up questions
- Attendance certificate provided to self-report CE credits
Speaker: Jeffery W. Johnson, Bankers Insight Group, LLC
Jeffery Johnson has been in financial services more than 40 years. He has been VP and senior lender for a large regional bank and SVP and commercial banking division manager for a community financial institution. Most of his career has been spent in credit administration, lending, business development, loan review, management, and training and development. Over the last 17 years, Jeffery has provided training for several banking associations and individual financial institutions nationwide.
Jeffery holds a bachelors in accounting from Morehouse College in Atlanta, an MBA in finance from John Carroll University in Cleveland, a Diploma of Graduation from the Prochnow School of Banking at the University of Wisconsin-Madison, and a Graduate Certificate in Bank Management from the First American Management Institute at the University of Pennsylvania’s Wharton School of Business.