CLFP Exam - Credit Process and Financial Statement Questions And Answers Already Graded A+

What applicant attributes are you trying to learn about when underwriting a deal? - 1.) The desire to repay the debt 2.) the financial ability to make payments 3.) The reserves to withstand unexpected setbacks What are the four (4) C's of Credit? - 1.) Character: the desire to pay back debt 2.) Cash Flow: Ability to make payments 3.) Capital: Ability to withstand setbacks 4.) Collateral: Ability to liquidate to recover investment when the initial three (3) C's fail What are common credit criteria in the app only process? - 1.) TIB 2.) Industry 3.) Equipment type 4.) Bank Balances 5.) Personal Credit Reports 6.) Business Credit Reports 7.) Landlord rating 8.) Vendor quality 9.) Lease structure 10:) New/Used equipment 11.) Equipment location 12) Comp credit 13) SOS 14) ReferencesCharacteristics of App Only? - 1.) limited upfront information (application) 2.) low-touch, high volume 3.) Credit scoring What are common credit criteria of mid ticket credit process? - 1.) TIB 2.) Principal's credit 3.) deal structure 4.) equipment type 5.) 2-3 years financial analysis (statements) 6.) background check 7) trade & bank references How does Entity type impact underwriting? - 1) different credit risks/considerations 2)different legal risks/considerations; 3) different documentation requirements Describe a Sole Proprietorship? - 1.) An individual who owns a business 2.) No legal requirements apart from business license 3.) Typically DBA or "doing business as" 4.) Don't file separate tax returns - 1040 Schedule C 5.) Tax Return: Income reported before owner draw/taxes 6.) Cash flow: income after tax and draw Describe a Partnership? - 1) Two or more people doing business documented with Partnership Agreement 2.) Separate financial & tax statement 3.) Income is generally reported prior to draw/tax 4.) Profits/Losses distributed to partner in accordance with agreeemntWhat is General Partnership? - Partnership with two or more people/entities each of which is legally liable for business. What is Limited Partnership? - Partnership with two or more people/entities with at least one General Partner and the others Limited Partners. General Partners are liable for all company activities. Limited Partners liability is limited to their investment. What is a Joint Venture? - 1.) Two or more companies with common interest created for a specific project 2.) share financial statement 3.) Share profit/loss 4.) Dissolve at some date.