Corporate Credit Analysis and Lending Decisions Training Course for Bankers

Programme Summary

Corporate credit analysis and lending decisions are the subject of this five-day training course for credit analysts, relationship managers, committee members and risk officers at managerial level, ending in a credit memo for one borrower. Lending errors usually trace to a missed business risk, a misread cash flow or a weak structure rather than to arithmetic. The approach moves from business and industry risk, through cash flow, projections and ratings, to facility structure, committee decisions and monitoring, and then to a worked memo. Mars Training Centre UK delivers this programme in corporate credit analysis and lending decisions.

The Business Case

Lenders that approve credit on historic ratios alone often miss concentration, refinancing and sector pressures that surface after drawdown. Those that analyse the business, test cash flow under stress and record the reasoning behind each decision can price risk with evidence, set terms that protect repayment and act early when conditions change.

• Credit Loss Exposure: Falls as weak repayment capacity is found before approval and watched afterwards.
• Decision Consistency: Improves as analysts and committees apply the same rating and memo discipline.
• Approval Cycle Time: Shortens as memos answer committee questions in advance.

Principles and Evidence Base

• Basel Committee Principles for the Management of Credit Risk: Their expectations of a sound credit-granting process, credit administration and monitoring frame Sessions 1, 4 and 5.
• Cash flow and debt service coverage analysis: This repayment-capacity approach underpins the financial analysis in Session 2.
• Scenario and sensitivity analysis: These methods structure the stress tests and rating work in Session 3.

Intended Participants

• Credit analysts who prepare borrower assessments and recommendations.
• Relationship managers who present requests and negotiate terms.
• Credit committee members who challenge and approve exposures.
• Risk officers who review ratings and monitor the portfolio.

The programme serves commercial banks, development lenders, leasing companies and corporate treasury teams.

Learning Outcomes

1. Participants will be able to evaluate business and industry risk for a corporate borrower.
2. Participants will be able to analyse financial statements and cash flow to judge repayment capacity.
3. Participants will be able to construct projections and stress tests for a borrower.
4. Participants will be able to prioritise the factors that set an internal risk rating.
5. Participants will be able to design a facility with suitable security and covenants.
6. Participants will be able to justify a lending recommendation in a credit memo and set a monitoring plan.

Programme Structure

Day 1: Corporate Credit Analysis Foundations

What business and industry risks decide whether a borrower can repay?

• Borrower Purpose and Repayment Source Statement
• Industry Risk and Competitive Position Review
• Management and Ownership Assessment
• Basel Committee Credit-Granting Principles
• Case Review of Two Corporate Loan Failures

Day 2: Financial Statement and Cash Flow Analysis

How do financial statements show real repayment capacity?

• Financial Statement Quality Review
• Ratio Analysis of Leverage and Liquidity
• Cash Flow Statement Reconstruction
• Debt Service Coverage Calculation
• Working Capital Cycle Diagnosis

Day 3: Projections, Stress Tests and Internal Risk Ratings

How resilient is repayment under pressure, and what rating follows?

• Projection Assumption Review
• Downside Scenario Design
• Sensitivity Table on Margins and Rates
• Internal Risk Rating Scorecard
• Rating Override and Rationale Record

Day 4: Facility Structure, Covenants and Monitoring

What terms and controls protect repayment once the loan is drawn?

• Facility Type and Tenor Matrix
• Security and Guarantee Assessment
• Covenant Package Design
• Early Warning and Monitoring Triggers
• Credit Committee Decision Record

Day 5: Applying Corporate Credit Analysis to One Borrower

Is the credit memo ready for the committee to decide?

• Applying the Session 1 Risk Statement to the Borrower
• Testing the Session 2 Coverage Calculation on Sample Accounts
• Checking the Session 3 Rating Against Stress Results
• Applying the Session 4 Covenants to the Proposed Facility
• Completing the Credit Memo and Monitoring Plan

Methodology

The programme is built around case analysis and structured exercises. Participants work with anonymised borrower files and sample accounts, rebuild cash flow, stress projections and draft terms in small teams, then defend the memo before a simulated credit committee. No programming or modelling software is required.

• Suggested activity: Rebuilding a cash flow statement from a sample balance sheet and income statement.
• Suggested activity: Rating a sample borrower and defending any override.
• Suggested activity: Answering committee questions on a draft recommendation.

Capstone Output

Each participant completes a credit memo for one borrower. It contains a risk statement, a cash flow and coverage analysis, stress results, a rating with rationale, a proposed facility with covenants, and a monitoring plan. It is used to brief the credit committee and as the file note for later reviews.

Frequently Asked Questions

Is corporate credit analysis training suitable for relationship managers without an analyst background?

Yes. Corporate credit analysis training is set at managerial level and assumes experience of lending, corporate banking or risk work, not prior specialist analysis.

Which standards does corporate credit analysis rest on in this programme?

Corporate credit analysis rests on the Basel Committee Principles for the Management of Credit Risk, together with cash flow coverage and scenario analysis methods.

How is the corporate credit analysis memo used at work?

You use the corporate credit analysis memo to brief the credit committee, record the reasoning for the decision and guide later monitoring reviews.