Adding Some Muscle through Operational Due Diligence

When lenders need to assess the financial health of a company, they should conduct the equivalent of an executive physical by performing thorough due diligence of the plant-level operational capabilities of their existing and potential clients. Traditionally, when lenders consider an applicant for a...

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Bibliographic Details
Published inMichigan Banker Vol. 24; no. 6; p. 11
Main Author Monahan, Tim
Format Trade Publication Article
LanguageEnglish
Published Lansing Public Relation Enterprises, Inc 01.06.2012
Subjects
Bank loans
Bank management
Banking
Capital assets
Due diligence
Guidelines
Manufacturing
Underwriting
United States > US
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Summary:When lenders need to assess the financial health of a company, they should conduct the equivalent of an executive physical by performing thorough due diligence of the plant-level operational capabilities of their existing and potential clients. Traditionally, when lenders consider an applicant for a business loan, they tend to stop short of conducting a comprehensive operational analysis. Instead, lending decisions are based on an evaluation of more standard, time-honored criteria: creditworthiness, cash flow history, and collateral among other financial factors. Most banks have a hard time adding that operational due diligence step to their loan underwriting processes.
ISSN:1044-1948