Credit Evaluation School Dec 2022

6 P Format

Person/People Who is the borrower? What is the borrower’s primary business? Who are the owners of the business? What is the borrower’s background and experience? Are there guarantors? Are there any related businesses which need to be discussed? Purpose How are the loan proceeds being used? Is the structure of the financing appropriate for the loan purpose? Are the repayment terms appropriate considering the frequency and source of repayment? Protection What is the collateral? What is condition and value of the collateral? How is the lender’s interest in the collateral secured? Payment What is the primary source of repayment? Is this repayment source adequate to repay the loan? What is the secondary source of repayment? Is this repayment source adequate to repay the loan? Is there a tertiary source of repayment? Is this repayment source adequate to repay the loan? Problem Do any weaknesses exist which are jeopardizing repayment of the loan? Are there any potential weaknesses which have emerged? Prospects What actions are being taken by the borrower or the bank to address the weaknesses related to the loan?