CFI CBCA Credit Administration and
Documentation Exam Questions And
Correct Answers.
Credit Administration and Documentation
Session Objectives - Answer Understand the importance of credit administration and
documentation
Understand loan approval documentation
Describe the loan monitoring process and documentation
Course Overview - Answer Credit administration
Loan approval documentation
Loan monitoring documentation
Credit administration is all about - Answer documentation, ongoing monitoring, and possibly
re-classifying a borrower after a loan has been made.
Documentation
Timely, relevant and thorough documentation is critical for the credit administration process to
work effectively. Three key documentation categories are: - Answer • Loan Approval
documentation
• Security documentation
• Monitoring documentation
Monitoring
The borrower must be carefully monitored and continuously re-assessed. This is important
when changes to the borrower's situation might affect their ability to repay the loan.
Monitoring involves: - Answer • Undertaking regular reviews of a borrower's financial
statements (at least once a year)
• Evaluating financial ratios to continuously assess how this may impact credit risk
• Evaluating changes in a borrower's business, industry and management team and how these
, As a borrower's account is monitored it may need to be re-assessed and re-classified to better
reflect the level of credit risk present. Re-classifying includes: - Answer • Determining the new
level of credit risk associated with a borrower
• Considering changes in security, covenants and loan pricing to reflect any change in credit risk
Credit administration is crucial for - Answer monitoring borrowers, identifying problems,
reducing the risk of credit default, and protecting the organization if default occurs.
Appropriate credit administration and documentation practices allow for: - Answer Better
information for more informed decisions regarding actions taken towards a borrower.
Increased comfort that the lender is protected in case of a deterioration in a borrower's credit
quality up to and including in the event of a loan default.
More flexibility to respond to changes in a borrower's circumstances.
Credit documentation includes: - Answer Loan approval documentation
Monitoring documentation
Loan approval documentation - Answer Loan application
Term sheet
Commitment letter
Loan agreement
Monitoring documentation - Answer Monthly / quarterly
Annual
The size, history, and credit quality of a borrower will determine - Answer the depth of
analysis undertaken and the number of documents required from a borrower.
Loan Approval Documentation - Answer The loan approval process starts with a loan
application and ends with a loan agreement. There are a number of important documents that
are needed to complete this process including:
Loan application
Documentation Exam Questions And
Correct Answers.
Credit Administration and Documentation
Session Objectives - Answer Understand the importance of credit administration and
documentation
Understand loan approval documentation
Describe the loan monitoring process and documentation
Course Overview - Answer Credit administration
Loan approval documentation
Loan monitoring documentation
Credit administration is all about - Answer documentation, ongoing monitoring, and possibly
re-classifying a borrower after a loan has been made.
Documentation
Timely, relevant and thorough documentation is critical for the credit administration process to
work effectively. Three key documentation categories are: - Answer • Loan Approval
documentation
• Security documentation
• Monitoring documentation
Monitoring
The borrower must be carefully monitored and continuously re-assessed. This is important
when changes to the borrower's situation might affect their ability to repay the loan.
Monitoring involves: - Answer • Undertaking regular reviews of a borrower's financial
statements (at least once a year)
• Evaluating financial ratios to continuously assess how this may impact credit risk
• Evaluating changes in a borrower's business, industry and management team and how these
, As a borrower's account is monitored it may need to be re-assessed and re-classified to better
reflect the level of credit risk present. Re-classifying includes: - Answer • Determining the new
level of credit risk associated with a borrower
• Considering changes in security, covenants and loan pricing to reflect any change in credit risk
Credit administration is crucial for - Answer monitoring borrowers, identifying problems,
reducing the risk of credit default, and protecting the organization if default occurs.
Appropriate credit administration and documentation practices allow for: - Answer Better
information for more informed decisions regarding actions taken towards a borrower.
Increased comfort that the lender is protected in case of a deterioration in a borrower's credit
quality up to and including in the event of a loan default.
More flexibility to respond to changes in a borrower's circumstances.
Credit documentation includes: - Answer Loan approval documentation
Monitoring documentation
Loan approval documentation - Answer Loan application
Term sheet
Commitment letter
Loan agreement
Monitoring documentation - Answer Monthly / quarterly
Annual
The size, history, and credit quality of a borrower will determine - Answer the depth of
analysis undertaken and the number of documents required from a borrower.
Loan Approval Documentation - Answer The loan approval process starts with a loan
application and ends with a loan agreement. There are a number of important documents that
are needed to complete this process including:
Loan application
