Credit Evaluation School Instructor eBook - Oct 2023

People:

Borrowers ‐ ATOM BRUSH COMPANY, INC. Guarantor ‐ Joshua H Borrower is a broom and brush manufacturer. Loan (1) is term note to purchase equipment. Loan (2) is a revolving line of credit (aka: RLOC) Loan (3) term note to refinance the manufacturing plant. Repayment comes from cashflow generated by the borrowers operations.

Purpose:

Payment: Protection:

Equipment, A/R, Inventory, and Real Estate CLTV result in an aggregate LTV of approximately 82%.

Problem:

Severe decline in sales, profits, and cash flows due to loss of large customer. FYE operations showed a net loss, cash flows were short of DSC requirements. Guarantor is not seen as a source of support. Based on review of audited statements, loan modifications may be in order.

Prospects: