Credit Evaluation School Instructor eBook - Oct 2023

SCENARIO 8  Bank advanced $100,000 for the purchase of a widget making machine.  No payments are required, except for annual interest.  Three years later, business is booming and profitable, the balance is still $100,000, and customer would like to replace the machine with a larger unit.  When purchased, the machine was thought to have a useful life of about 7 years.  The loan officer is still trying to obtain a perfected lien on the original widget making machine.  For this loan, would you recommend:  Pass  Special Mention  Substandard  Doubtful  Loss