NCI Courses

Reminder of legal and regulatory responsibilities Application through to cheque drawdown Purpose of the loan, productive purpose, never to pay debts or taxes, concept that the last lender is the fool

•Management accounts, i.e.client’s own figures, likely to be limited in detail, unlikely to have P&L, may be basic Audited accounts, provided by accountant, within 18 months of year end Certified accounts, sole traders etc., prepared by accountant, may not have all info requiredto assess repayment capacity Revenue returns Strong bank account operation coupled with a good repayment record where small and repeat facilities are required Difference between new and established business, very different risk profile Differences in sole traders, SMEs and agri

Is the business profitable, can profit give client a living, pay taxes and pay back the loan?, NDI and expenditure guidelines Is the business generating cash, profit and cash may differ, is business being paid in time to meet obligations, revenue returns useful here Simple assessment of repayment capacity; net profit from accounts, add back depreciation and interest, less drawings = amount available for repayments Sales book previous and upcoming sales forecasts Short term facilities, cash-flow forecast may be helpful, client may have definite out of the ordinary payment coming to repay the facility How long is business established, has it a good repayment record, do figures stack up?

Business is only as good as its promoters, assess the promoters as you would an individual loan (Campari or 5c’s) Offer to visit business if felt necessary, there should not be resistance to this Are there other similar businesses on books that can be compared with? Is there a business plan? Does lenders auditor have experience in the industry use other sources to establish industry norms (IDA, Enterprise Centres, Internet, etc. Is business heavily reliant on a small number of clients, do they pay on time? What effect will the requested loan have on the business? Remember the client knows their business best, ask all questions that need answering What’s the competition, what’s the USP? Would you buy the product/service?

When to interview, when not Applicant should be at ease, interview, not interrogation Examine financials pre-meeting have questions ready Technique will depend on clients personality Let client do most of talking, when appropriate Before interview note minimum required information required, make sure its obtained, use checklists If further information is required, write down what is required and give to client Ensure client knows that when A, B & C areavailable they will have a decision

Prepare basic balance sheet from client information Will require debtors, creditors and stock figures, all assets and liabilities Debtor collection and creditor payment arrangements Any capital expenditure undertaken or planned Any personal assets/liabilities outside of the business Tax liabilities, including VAT

Definition; stock + debtors -creditors Poor w/c management will cause pressure on the business Poor working w/c may seriously impair repayment ability Which businesses have a w/c need and why What good w/c management involves

Are there loan repayments, were they declared? Are existing loans on the balance sheet Is the account operating within the overdraft stated on the statement?, is the overdraft limit similar on all statements? Lifestyle payments on business statement Does turnover equate to turnover per accounts or per customer figures? Are there unpaid items on the statement? Have any penalties been applied on the account?

Importance of agriculture to the Irish economy Financial structure of Irish agriculture EU support and international markets Keyagri sectors & specialist sectors Agri is still a business loan, so business lending criteria applies Enterprises Off farm income Agri KPIs Farmers tend to know their business better than any other business person General, efficient farmer never stands still, always improving be investment in stock, machinery or buildings Emerging structures and technology