Credit Evaluation School Instructor eBook - Oct 2023

SCENARIO 6

 Borrower is a mom and pop clothing store which has struggled as the online market has taken over.  Trends have been downward over last few years with financial statements showing declining net worth, losses, and negative cash flow in each of the past three years.  While payments have been made, they are now running between 30 and 60 days past due.  The value of the inventory, accounts receivable, and general business assets are enough to repay the debt.

 For this loan, would you recommend:  Pass  Special Mention  Substandard

 Doubtful  Loss