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Pre-Loan SurveysThe analysis and reporting are much the same for a pre-loan survey as for a collateral monitoring exam, however, the emphasis in a pre-loan survey is on gaining an understanding of the processes and systems in place at the debtor. The lender needs to have a baseline comfort level with how the debtor operates and the debtor’s competencies in maintaining reliable financial data. We perform field exams in a multitude of industries, but we also understand that every company and every loan relationship is different. It is this key understanding that separates us from our competitors. We are able to work and converse with debtors and lenders to ensure that the collateral is represented properly. Procedures typically include:

  • Interviewing key debtor personnel in the accounting department as well as executives to determine processes, internal controls, employee morale, any suspected fraud
  • Performing walkthroughs of significant transactions
  • Reviewing incorporation paperwork
  • Reviewing any current loan relationships with other lenders
  • Evaluating accounts payable agings, payroll reports, sales tax filings, and insurance coverage
  • Analyzing accounts receivable trends and assessing reasonableness of values based on knowledge of the industry and the debtor’s market
  • Reviewing the accuracy and integrity of inventory reports through cost testing
  • Determining ineligible receivables and inventory based on the loan parameters
  • Vouching shipments to bills of lading or other third-party source documents in order to verify the existence of receivables
  • Counting inventory for a selected sample size in order to verify the existence of inventory