BAS Presentations - March 2023

Loan Classification Decision #2 (Smith Farming)

Basic Facts: • Smith Farming, LLC has an equipment loan that is severely past due. • The operation has been unsuccessful, and a farm sale is being held next month. • The last financial statement indicates the equipment securing the loan is worth $300,000; however, it is unknown how much the auction will bring. • The loan balance is $300,000.

How would you classify this loan?

31

Basic Facts: • Jane Doe is reportedly a wealthy individual that has a $1,000,000 unsecured loan to purchase a strip mall. • No documentation is maintained in the file and the note only requires annual interest payments. • The first interest payment was paid on time. Loan Classification Decision #3 (Jane Doe)

How would you classify this loan?

32