Chpater 17: Commercial Bank Management Key Topics
CHAPTER 17
LENDING TO BUSINESS FIRMS AND PRICING BUSINESS LOANS
Goal of This Chapter: The purpose of this chapter is to explore how bankers can respond to a business customer seeking a loan and to reveal the factors they must consider in evaluating a business loan request. In addition, we explore the different methods used today to price business loans and to evaluate the strengths and weaknesses of these pricing methods for achieving a financial institution’s goals.
Key Topics in This Chapter
• Types of Business Loans: Short-Term and Long-Term • Analyzing Business Loan Requests • Collateral and Contingent Liabilities • Sources and Uses of Business Funds • Pricing Business Loans • Customer Profitability Analysis
Chapter Outline
I. Introduction
II. Brief History of Business Lending
III. Types of Business Loans
IV. Short-Term Loans to Business Firms A. Self-Liquidating Inventory Loans B. Working Capital Loans C. Interim Construction Financing D. Security Dealer Financing E. Retailer and Equipment Financing F. Asset-Based Financing G. Syndicated Loans (SNCs)
V. Long-Term Loans to Business Firms A. Term Business Loans B. Revolving Credit Financing C. Long-Term Project Loans D. Loans to Support the Acquisition of Other Business Firms-Leveraged Buyouts
VI. Analyzing Business Loan Applications A. Most Common Sources of Loan Repayment B. Analysis of a Business Borrower's Financial Statements
VII Financial Ratio Analysis of a Customer's Financial Statements A. The Business Customer's Control over Expenses B. Operating Efficiency: Measure of a Business Firm's Performance Effectiveness C. Marketability of the Customer's Product or Service D. Coverage Ratios: Measuring the Adequacy of Earnings E. Liquidity Indicators for Business Customers F. Profitability Indicators G. The
LENDING TO BUSINESS FIRMS AND PRICING BUSINESS LOANS
Goal of This Chapter: The purpose of this chapter is to explore how bankers can respond to a business customer seeking a loan and to reveal the factors they must consider in evaluating a business loan request. In addition, we explore the different methods used today to price business loans and to evaluate the strengths and weaknesses of these pricing methods for achieving a financial institution’s goals.
Key Topics in This Chapter
• Types of Business Loans: Short-Term and Long-Term • Analyzing Business Loan Requests • Collateral and Contingent Liabilities • Sources and Uses of Business Funds • Pricing Business Loans • Customer Profitability Analysis
Chapter Outline
I. Introduction
II. Brief History of Business Lending
III. Types of Business Loans
IV. Short-Term Loans to Business Firms A. Self-Liquidating Inventory Loans B. Working Capital Loans C. Interim Construction Financing D. Security Dealer Financing E. Retailer and Equipment Financing F. Asset-Based Financing G. Syndicated Loans (SNCs)
V. Long-Term Loans to Business Firms A. Term Business Loans B. Revolving Credit Financing C. Long-Term Project Loans D. Loans to Support the Acquisition of Other Business Firms-Leveraged Buyouts
VI. Analyzing Business Loan Applications A. Most Common Sources of Loan Repayment B. Analysis of a Business Borrower's Financial Statements
VII Financial Ratio Analysis of a Customer's Financial Statements A. The Business Customer's Control over Expenses B. Operating Efficiency: Measure of a Business Firm's Performance Effectiveness C. Marketability of the Customer's Product or Service D. Coverage Ratios: Measuring the Adequacy of Earnings E. Liquidity Indicators for Business Customers F. Profitability Indicators G. The