Chapter 1 Introduction to Loan Decision Making: The PRISM Model

Chapter Outline

  • Management 5
    • Business Operations 5
      • Company Information 5
      • Industry Information 6
    • Management Basics 6
    • Bank Relationship 7
    • Financial Reporting 8
  • Intention (Purpose) 8
  • Repayment 9
  • Internal Repayment Sources: Short-Term Loans 9
  • External Repayment Sources: Short-Term Loans 11
  • Internal Repayment Sources: Long-Term Loans 12
  • External Repayment Sources: Long-Term Loans 13
  • Safeguards 13
    • Collateral 14
    • Guarantees 14
    • Covenants 14
  • Perspective 15

Unlike Mark Twain’s cat that once sat on a hot stove lid and would never again sit even on a warm one, bankers should always be careful to get from an experience just the wisdom that is in it—no more, no less. Banks need ...

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