Question

Assume that you are a commercial loan officer for a bank and are preparing to meet with a corporate client. The client has approached you seeking an increase in the loan it has with the bank. Prepare a list of things that you would want to know about the company’s operations before you decide whether to approve the increase in the loan.

Answer 1

As a Commercial Loan Officer, There are a lot of things which are to be considered before approving the increase in the loan ampount.

• Business Plan for which they want extra loan
• Payment History of Company regarding the current loan
• Additional collateral offered by the company
• Projected Financial Statement if loan is sanctioned.
• Whether Company has taken loan from Other lenders also or not?
• Complete details of Accounts Receivables and Payables
• Ratio's of company like Quick ratio, Current Ratio, debt to equity ratio
• If collective loan amount (loan given in past + additional loan) is considerably high then conditions like one representative of bank will attend all the board of director's meeting.
• Employee turnover ratios as high employee turnover ratio implies that business employees are not satisfied with company and there is chances that it may adhere the stability of business.

These are some of the things which are to be considered while approving the increase in loan amount.