The Bank Loans Policy Procedure provides guidelines for determining suitable lending requirements and format and preparation of loan proposals. This procedure applies to bank loan applications but can be used for alternate forms of financing. Proposals can be used for loan applications for one or more banks or lending institutions. (8 pages, 1883 words)
The CFO (Chief Financial Officer) is responsible for directing the Finance Department in developing borrowing and financial plans to meet the needs of the Company’s operations.
The Board of Directors is responsible for authorizing the raising of capital through bank loans.
There are some terms used in the Bank Loans Policy Procedure that you should know. These include:
Collateralization – Securing a debt in part or in full by a pledge of collateral (an asset pledged as security to ensure payment or performance of an obligation).
Covenant – Condition that a borrower must comply with according to the terms of the loan agreement; if the borrower does not act in accordance with a covenant, the loan can be considered in default, in which case the lender has the right to demand payment, usually in full.
Credit scoring – Measuring and evaluating creditworthiness of a loan applicant; profitability, solvency, management ability, liquidity, and other information may be factored into an applicant’s credit score.
Takedown – Transfer of money from a lender to a borrower under a loan agreement, loan commitment, or line of credit.
- Assessing Capital Requirements
- Preparing the Loan Application
- Applying for the Loan
- Closing the Loan
- Loan Service and Reporting
- Loan Analysis
Forms Included in the Bank Loans Policy Procedure
- Loan Application Checklist Form