1. Extending Credit

2. Agenda Underwriting 5 C’s of credit Needed Materials Financials Items you might look at What an underwriter does 2

3. Underwriting 3

4. What you should be Looking For 4 Character Capacity Capital Collateral Condition

5. Character Overall impression you make on the lender Individuals are forthright and honest 5

6. Capacity Ability to repay the loan Lenders usually look for $1.20 of income for every $1.00 of Principal and interest payments 6

7. Capital Owner or Management team’s personal investment in the business. “Skin in the game” 7

8. Conditions What are the current economic conditions What is the competitive landscape of the business 8

9. Collateral What will be pledged as security for the loan. Can the assets support payment of loan 9

10. Items you might look at Application Business Tax Returns Personal Tax returns Schedule of Outstanding loans Savings generated by project 10

11. Financials Compiled – putting together financial statements provided by the client Review – provides a reasonable basis of assurance Audited – a formal examination and endorsement of information 11

12. What an Underwriter does Trend Analysis – Spread Debt Service Coverage Ratio Cash Flow vs. Debt Service Leverage 12