In a perfect world, loan repayment would come from the primary sources highlighted in the loan approval memo – income from operations or from leases and rents for commercial real estate. Unfortunately, primary repayment sources can fail or become subject to local economic conditions. When that happens, secondary repayment sources, such as guarantors or individual co-borrowers, must be relied upon. In some cases, collateral may have to serve as a tertiary repayment source.
This presentation will highlight factors that should be considered when evaluating individual guarantors and co-borrowers. Collateral analysis will not only focus on commercial real estate, where value is relatively easily defined, but also consider other types of collateral, such as equipment, accounts receivable, and inventory.
- Analysis of individual guarantors and co-borrowers, including global cash flow, contingent liabilities, and pass-through entities
- Types and differences of entity ownership, leading to an understanding of who should serve as guarantor, including the concept of the limited guaranty
- Regulation B considerations when requiring co-borrowers or guarantors
- Lending against non-real estate collateral, such as accounts receivable, inventory, and equipment
- Common gaps in collateral analysis and considerations when lending against non-real estate collateral, including the borrowing base certificate
- Appraisal exemptions, proper use of abundance of caution, and collateral monitoring after loan origination
- Weaknesses in the above topics as identified by external loan review and regulatory agencies
- TAKE-AWAY TOOLKIT
- Employee training log
- NEW: Interactive Quiz to measure staff learning
WHO SHOULD ATTEND?
This informative session will benefit credit personnel, including credit analysts, loan officers, senior credit officers, and staff involved in loan collection, portfolio monitoring, and loan decision-making.
SPEAKER: Aaron Lewis, Young & Associates, Inc.
Aaron Lewis is a consultant in the lending and compliance divisions of Young and Associates. As a consultant, he assists clients by performing loan reviews and ALLL methodology reviews. In addition, he has performed reviews in lending compliance and quality control. Prior to joining Young and Associates, Aaron was employed by a community bank in southeast Michigan for eleven years. He worked his way through various facets of the operation from frontline service, to branch management, to Vice President, Credit Administrator. He also has secondary market, compliance, and asset quality experience. Aaron holds a Bachelor’s in finance from Michigan State University and graduated from the Graduate School of Banking, University of Wisconsin.