Commercial Credit Analysis and Lending

The role of a credit analyst, the importance of commercial lending, and the practical skills needed to assess business clients and support sound credit decisions.

Foundational accounting concepts, principles, business structures and how financial information is prepared and used in credit decisions.

The key financial statements and how they work together to give a complete view of business performance, financial position and cash flow.

Revenue, gross profit, operating expenses, EBITDA, net profit and how profitability trends affect credit risk and repayment capacity.

Assessing a client’s financial position, liquidity, solvency and leverage to identify balance sheet risks and support credit recommendations.

Operating, investing and financing cash flows, and how cash flow analysis informs liquidity, debt servicing capacity and business sustainability.

EBITDA, CFADS, ICR, DSCR, repayment structures and interest rate sensitivity, and how lenders assess whether a borrower can service debt.

Fixed costs, variable costs, contribution margin and breakeven point, with a focus on business viability and credit risk implications.

Forecast assumptions, three-way financial modelling, downside sensitivity and how forecasts support credit recommendations.

Working capital, the cash conversion cycle, DSO, DIO, DPO and how working capital movements affect liquidity and funding needs.

Profitability, liquidity, leverage and coverage ratios used to assess business performance, financial risk and debt capacity.

The purpose of financial covenants, how they’re set, monitored and interpreted, and how covenant breaches affect credit decisions.

Interest-only, principal and interest, bullet and balloon repayment structures, and how repayment terms should align with cash flow.

Common commercial lending products including overdrafts, term loans, asset finance, trade finance and working capital facilities.

Borrower risk assessment, and the financial and qualitative risk factors that influence probability of default.

Security instruments including mortgages, guarantees, General Security Agreements and other forms of lender protection.

Recovery risk, security value, asset liquidity and how lenders assess potential loss if a borrower defaults.

Key clauses, conditions precedent, undertakings and covenants, and how loan documentation reflects approved lending terms.

Identifying financial, operational, behavioural and industry warning signs that may indicate emerging credit risk.

Applying the full program by preparing a final credit paper using real company financials, forecasts and a three-way financial model. This assessment demonstrates financial analysis, credit risk assessment, lending structure and commercial judgement.