Condensed Credit Training

Stop loosing business because your people don't understand the deal and fear pitching the small business owner...give your bankers the skills to spot a good deal when they see it…stop wasting time on deals that don't fit your loan portfolio.

Small business owners want to speak with someone that knows what they're talking about and they know when they are speaking with an inexperienced lender.  They can see the lack of knowledge written all over their face.  ODM's 4-day program has been designed for business developers, branch managers, junior lenders and new credit analyst looking to improve their credit skills and ability to speak intelligently about the financial issues facing today's business owners. 

This highly effective program gives participants a level of knowledge to understand the deal and scrutinize its viability.  This improves your bank's overall credit quality, speeds the analysis process, approval process and improves your closing ratios.

The program consist of four one-day (two days for banks wishing for more class room application time) workshops which build on each other and give participants the basic knowledge of the credit process.  The program leaves participants confident that they can hold their own with any small business owner. 

Course One:  Financial Accounting for Bankers

The seminar is intended for those with no prior background in accounting or for those who need a review of first year accounting.  It provides a platform for the basic balance sheet ratio analysis that follows.  Specific course content includes: 

  • General ledger                              

  • The balance sheet

  • Income statement

  • Cost basis

  • Accrual vs cash Acct

  • Financial Statements

  • Current assets

  • Current liabilities

  • Fixed Assets

  • LTD

  • Capital accounts

  • Sales

  • Cost of goods sold

  • Operating expenses

  • Amortization

  • Depreciation

  • Straight line

  • MACRS

  • Dividends

  • Accruals

  • Bad Debts

  • Write-off receivables

  • Marketable Securities

  • Prepaid expenses

  • Goodwill

Course Two: Spreading the Numbers: Ratio Analysis 

The ratio analysis course is the essential center of our credit training program.  Participants spread financial statements and compute ratios to determine financial condition of new and existing credits.

Specific course content includes:

  • Structuring lines of credit

  • Structuring equipment term loans

  • Structuring working capital loans

  • Basis of credit

  • Need

  • Source of repayment

  • Collateral analysis

  • Size of line of credit

  • Size of term loan

  • How much working capital is needed

  • Manufacturing capacity ratios

  • Efficiency ratios

  • Profitability ratios

  • Cost containment ratios

  • Marketing ratios

  • Capital structure and ROE

  • Qualify of cash conversion cycle

  • CPA statements

  • Unqualified

  • Qualified

  • No opinion

  • Common size statements

  • Income tax analysis

  • Is the business a real business or a tool of the entrepreneur to support outside ventures

  • How much does owner really get out of business

  • Ratios tell us why are they coming to bank

Course Three: Can They Make the Payment:  Cash Flow Analysis

This important adjunct to ratio analysis teaches how to read, analyze, and generate a basic source and use of funds statement.  Ratio analysis together with cash flow analysis enables the new banker to do full financial statement analysis.

Specific course content includes:

  • Statement of changes in working capital

  • Direct method

  • Indirect method

  • Ad hoc method

  • Cash flow vs. accrual accounting

  • Basic sources and uses of cash

  • Analysis of spontaneous financing section

  • Analysis of investing section

  • Analysis of financing section

  • Interpreting the statement of cash flows

  • Exercises in constructing a statement of cash flows

  • from raw financial statements

  • Correlation of ratio analysis and cash flow analysis

Course Four: Commercial Lending Case Studies

The final course brings everything together allowing participants the opportunity to put what they have learned into practice.  They will work on two specific loans from start to finish.  This will give them the opportunity to take a loan request and see if it is a doable deal. These are actual loan cases on the books at a bank.   We get access to memos and other elements of the credit file, and are able to critique the handling of the loan.

Specific course content includes:

Commercial Loan Case Analysis

  • Review of basis of a loan

  • Need

  • Source of repayment

  • Vacant debt capacity

  • Collateral analysis

  • Three kinds of loans:

  • Line of credit

  • Term loan for equipment

  • Term loan for working capital

  • Bank takeout of accounting payable financing

  • Deposit balances and loan pricing

  • Loan structuring and ratio analysis

  • Cash conversion cycle and a line of credit

  • Accounts receivable aging

  • Cost of supplier credit vs cost of bank line of credit

  • How much working capital needed

  • Analysis of the source of repayment

  • Complex profitability analysis

  • Value of personal guarantee

  • Outside net worth

  • Value of personal property

  • Reconciliation of retained earnings

  • Detailed use of a Dun and Bradstreet report

  • Collateral analysis

  • Inventory

  • Receivables

  • Fixed assets

  • Contingent liability analysis

  • Pre-existing SBA loans in the balance sheet

  • Deposit relationships at other banks

  • Corporate conduit financing of owner’s investment

  • Un-audited financial statements prepared by CPA

  • Reconcile tax with GAAP statements

  • Irregular financial statements

  • Offshore real estate development