Credit Evaluation School Instructor eBook - Oct 2023

People:

Borrower: Medical Associates of San Helena, LLC (MASH) Guarantor: Hawkeye Pierce, MD (100% owner) 16 ‐ years remaining on 25 ‐ year term note to buy out retiring partner

Purpose: Payment: Protection:

202x debt service coverage ratio (DSCR) of 0.76x • 1st lien on medical practice real estate @ 95% LTV • Closely held shares of business • Dr. Pierce's Guaranty Practice revenue declined due to loss of partner Monitor for improvement; consider restructure of loan.

Problem: Prospects:

Commercial Credit Quick Hitter – Classified Ask students what changed: debt service coverage declined to 0.76 Is this a pass? Why or why not? Loan is intended to be classified due to decline in revenue which lead to decrease in cash flow and a less than 1:1 debt service coverage ratio.