SRA provides banks with customized credit training to enhance lenders’ and credit analysts’ ability to underwrite credits with a focus on primary and secondary sources of repayment.
SRA augments or replaces standardized training available from a variety of organizations by bringing a training program which meets the specific needs of the bank. Training often includes team training and case studies, and provides a hands on experience which significantly enhances the students’ understanding of proper underwriting.
- Customized training to enhance lenders’ and credit analysts’ ability to underwrite credits.
- Teach the importance of business borrower’s (PSOR) cash flow first before evaluating guarantor and global cash flows.
- Review the two types of cash flow analysis (EBITDA and UCA) and when to use each.
- Review the components of global cash flow and teach how to calculate using the bank’s tools.
- Review the differences among taxable income and expenses versus true cash flow.
- Review tax returns and financial statements.
- Properly underwrite collateral.
- Utilize industry and market knowledge to estimate the sustainability of historical cash flows.
- Stress test PSOR.
- Explain how to spread guarantor outside cash flow, liquidity and net worth as the SSOR.
- Teach how to compare guarantor outside resources to business debt service under different scenarios.
- Teach how to assess impact of outside investments and contingent liabilities of guarantors on business debt scenarios.
- Highlight areas where common practice may cause double counting of income or assets and best practices to avoid this error.
- Teach collateral as a TSOR and differences between market value today and liquidation value later.
Benefits of SRA’s Credit Training
- Enable lenders and credit analysts to understand, analyze, and underwrite cash flows as the primary source of repayment.
- Provide underwriters with the tools to assess a borrower’s ability to repay the loan.
- Provide training over a multi-week “use and absorb” period to build deeper understanding of skills and fill in knowledge gaps.
- Provide best practices to strengthen analysis and better identify risks to repayment.
- Include executive participation to reinforce key training points and bank priorities.
- Reinforce learning points through use of actual bank cases. Case studies include review of the original underwriting and changes over time.