Intro to C&I Lending: Cash Flow, Collateral & Assessing Management Efficiency 2021 | Credit Union Webinar Network | 20 January 2021 | Webinar

After This Webinar You’ll Be Able To:

Confidently discuss the operating cycle of a business, including management efficiency
Understand what is meant by CapEx (Capital Expenditures), why acquiring fixed assets is needed as the business grows, and how CapEx impacts business cash flow
Address repayment ability for C&I credits considering both traditional EBITDA analysis and Uniform Credit Analysis
Distinguish between non-real estate and real estate collateral
Evaluate the level of risk in C&I transactions

Credit unions have started to originate more commercial and industrial (C&I) credits to provide loan portfolio diversification and expand credit offerings to their membership. As credit unions grow C&I portfolios, they must understand the differences between estimating repayment ability and the valuation and monitoring expectations of the underlying collateral.

This presentation will focus on three key attributes of C&I lending.

• Cash flow analysis. Financial institutions often treat C&I borrowers (non-real estate operating entities) similar to real estate holding companies in terms of credit analysis. However, a real-estate like EBITDA approach for entities that have significant trade account balances (accounts receivable, inventory, and accounts payable), won’t always provide the whole story in terms of cash available to service debt. Attendees will gain a better understanding of sources and uses of cash by a business, including cash derived from operations, cash used for investing in fixed assets, and cash provided to owners as dividends.

• Management efficiency. Understanding the operating cycle of your member’s business is essential. Learn how the lengthening and reduction of the operating cycle impacts the cash flow of an operating entity.

• Non-real estate collateral such as trade accounts (A/R and inventory) and equipment. Valuation of these assets is crucial in understanding secondary or tertiary repayment sources in C&I lending. This program will address factors to consider in non-real estate collateral, including valuation, determination of advance rates, and ongoing monitoring.

Who Should Attend?

This informative session will benefit commercial lenders, credit analysts, loan managers, commercial relationship managers, and anyone involved in, or moving toward, a career in commercial lending.

Take-away Toolkit

• Worksheet to determine an entity’s capital expenditures, even without a UCA model
• Worksheet to determine the appropriate operating line of credit
• Employee training log
• Interactive quiz

2021 Speaker

Aaron Lewis
Senior Consultant, Young & Associates, Inc