Term
|
Definition
| requirements: collateral, loan maturities, pricing, covenants that banks establish when structuring |
|
|
Term
| Guidelines for Ag Lending |
|
Definition
- indepth financial analysis
- evaluation of budgets and projections
- sensitivity analysis as part of cash flow projections
- structuring in accordance with type of loan
reliable collateral evaluations and margins to minimize risk |
|
|
Term
| Elements of Reviewing Financial Information |
|
Definition
- review the resonableness of assumptions and projections
- compare projections with actual
- assess working capital adequacy
- analyze net worth changes
- assess the impact of capital expentitures
- evaluate supplementary sources of income |
|
|
Term
|
Definition
important to structure loans based on type of loan made
- short term, long term, carry over debt |
|
|
Term
|
Definition
-most often made for production inputs
- are self-liquidating at the end of the production cycle from the proceeds from production sales |
|
|
Term
|
Definition
Term loans
- associated with the purchase of capital assets
- primary source of repayment is through cash flow from operations
- collateral is only viewed as contingent secondary repayment source |
|
|
Term
|
Definition
| - restructured short term debt resulting in the borrowers inability to liquidate the debt as planned |
|
|
Term
| Collateral Valuation and Documentation |
|
Definition
- property pledged as security for a loan or other obligation
- pledge of collateral adds safety to the loan since the lender may sell the pledged property to obtain payment if the debtor fails to pay |
|
|
Term
|
Definition
| process of evaluating the loan |
|
|
Term
| Requirements for Collateral |
|
Definition
- identifiable
- relatively nonperishable
- be able to establish a reasonable estimate of value
- be in saleable condition
- must have an established market |
|
|
Term
|
Definition
- current values of all collateral should be established when the loan is made
- periodic re-evaluation of value should be practiced |
|
|
Term
| Documentation of Collateral Values |
|
Definition
- location and identifying details
- fair market values, as of a specific date
- source of basis for calculation the value estimate |
|
|
Term
|
Definition
| - a charge upon property for the purpose of securing the payment or discharge of a debt or obligation |
|
|
Term
|
Definition
- method of obtaining and perfecting a security interest depends on the type of collateral
chattel or real property |
|
|
Term
|
Definition
| - an item or article of personal property |
|
|
Term
|
Definition
| - immovable property such as land, buildings, improvements and appurtenances |
|
|
Term
|
Definition
- many lenders require protective covenants and affirmative undertakings by the borrower as part of underwriting process
- loan can be considered default and lender has right to demand payment, if borrower does not act inaccordance |
|
|
Term
|
Definition
- maintain loan quality
- keep adequate cash flow
- preserve equity
- in a borrower with known weakness, its capital structure as a meaure to improve weakness
- keep updated picture of the borrower's financial performance and condition |
|
|
Term
|
Definition
- important process of loan underwriting
- collateral inspections and valuations should be performed on a regulat basis by qualified personnel
- a periodice review of loan documentation is important to ensure that all files are maintaned |
|
|
