Short-Term Loan Structuring Using Net Working Investment Analysis

This course is designed to demonstrate the factors required to consider in establishing the proper loan amount for short-term needs, and not rely solely upon a formula-driven approach. This is the essence of short-term loan structuring. During this session, the participant will learn how to calculate the length of the financing gap, which is the time between receipt of cash from the operating cycle and the time required to pay creditors.

Recorded Wednesday,
February 22nd, 2023
Presented by Jeffery Johnson
2h total length
$279.00 or 1 Token

Includes: 30 Days OnDemand Playback, Presenter Materials and Handouts

  • Commercial/Business Lending
  • Lending
  • Risk Management/Legal
  • Board Member
  • Branch Manager
  • Commercial Lender
  • Consumer Lender/Retail Banker
  • Credit Analyst
  • Internal Auditor
  • Loan Closer
  • Loan Operations Manager/Specialist
  • Risk Manager
  • Senior Management
  • Small Business Lender

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Structuring credit facilities for short-term loans and lines of credit is more challenging for commercial bankers compared to structuring long-term loans. Since loan-term loans are utilized to fund capital asset purchases, all you need is an appraisal, evaluation, invoice, sales contract, etc. to establish the value for the capital asset, then proceed to apply your bank’s loan to value margins to set the lendable amount. For Short-term loans and lines of credit, it is not that simple.

Short-term loans and lines of credit require examination of several factors to reach the proper amount required. This is very important because underfunding or overfunding the amount a borrower requires to fund their operations can cause a problem.

Specifically, the course will demonstrate the key financial ratios to determine the financing gap, and how to utilize this data to determine the Asset Conversion Cycle and the Operating Cycle. The course will then proceed to calculate the amount required to fund the financing gap by determining the Net Working Investment and the potential sources of cash to fund the gap before bank’s funds are deployed.

What You'll Learn

  • Define the Asset Conversion Cycle, Operating Cycle, and Fixed Asset Cycle
  • Calculate the Financing Gap by Utilizing Financial Ratio Analysis
  • Determine Sources of Cash to Fund the Financing Gap Before the Bank’s Funds are Required
  • Address Why a Revolving Line of Credit Not Revolving
  • Know the Common Causes of a Line of Credit Becoming Permanent Working Capital
  • Negotiate More Effectively With Borrowers Requesting Short-Term Funding

Who Should Attend

All individuals involved in credit administration including, but not limited to Credit Analysts, Commercial Lenders, Consumer Lenders, Branch Managers, Loan Review Personnel, Senior Loan Officer, Senior Credit Officer, Bank Directors, and Members of the Executive Management Team.

Jeffery Johnson

Instructor Bio

Jeffery W. Johnson started his career with SunTrust Bank in Atlanta as a Management Trainee and progressed to Vice President and Senior Lender of SouthTrust Bank and Senior Vice President and Commercial Banking Division Manager for Citizens Trust Bank of Atlanta.

Most of his career has been spent in Credit Administration, Lending, Business Development, Loan Review, Management and Training & Development. He has managed loan portfolios representing a cross section of loan types including: Large Corporate, High Net Worth Individual, Middle Market Companies, Small Business, Real Estate and Non-Profit Organizations.

Mr. Johnson is now a training professional in the financial industry by leading various seminars covering important topics relating to issues in financial institutions. He teaches actively for fifteen state banking associations in the United States, Risk Management Association (RMA) and individual financial institutions nationwide. He co-authored a training course entitled "Lending to Service and Other Professional Organizations" for RMA in 2001.

Mr. Johnson earned a B.A. Degree in Accounting from Morehouse College in Atlanta; a MBA in Finance from John Carroll University in University Heights, Ohio; Banking diploma from Prochnow School of Banking at the University of Wisconsin and a Graduate Certificate in Bank Management from the Wharton School of Business at the University of Pennsylvania.