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Most closely-held business loans are underwritten with an evaluation of the borrower’s trailing financial results, but that analysis frequently overlooks key data that defines the applicant’s total financial picture.

Many underwriters fail to weigh the business owner’s personal financial situation adequately when reviewing the company’s financial capacity and often, an inconsistent examination of financial statements skips information that’s important to understand the global financial conditions of the borrower and owner(s).

This training program discusses the step-by-step evaluation techniques for business financial statements coupled with the personal cash flow information of company principals to ensure that bank’s analysis reflects the entire financial situation while managing client loan accounts or evaluating new credit requests.

Learning Objectives

By attending this program, participants will learn:
  • Step-by-step process of collecting critical information from business and personal financial statements and other sources to discover accurate combined net cash flows from business operations and personal finances
  • What metrics can be employed to evaluate cash flow adequacy and trends
  • An explanation and comparison of the ‘rule of thumb’ cash flow method vs. the Universal Credit Analysis method to review business financial statements
  • Suggestions on how to determine appropriate expense “add backs” to allow when evaluating cash flow
  • The 6 questions to ask when deciding whether a business expense should be added back to measure actual business cash available to service debt
  • Steps to determine critical factors about owner’s personal cash flow to impact business
  • Strategies to impose prudent limitations of owner compensation and discretionary expenses
  • How to model a global cash flow evaluation of borrower’s debt repayment ability taking into account owner’s personal cash flow and obligations
  • Why lender should be skeptical of business brokers discretionary cash flow analysis and credit policy elements to consider re: cash flow evaluation
About Your Presenter

Charles Green serves as Managing Director of the Small Business Finance Institute, a commercial lender training company with almost 50 years of experience in funding small businesses.

Green has written extensively about business financing, including Banker’s Guide to New Small Business Finance (Wiley, 2014), Get Financing Now (McGraw-Hill, 2012) and bestselling The SBA Loan Book 3rd Edition (Adams Media, 2011). He earned a B.S. Finance from the University of Alabama, a diploma from the Stonier National Graduate School of Banking and completed Executive Education at Harvard Business School. Earlier in his career, he founded and served as President and CEO of Sunrise Bank of Atlanta.

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