How to Evaluate Your Borrower's Ability to Survive Inflation and Recession over the Business Cycle

What complicates survival in this current economic environment is the combination of elevated inflation and possible recession

Business cycles are inevitable, and bankers must understand borrowers’ funding needs through a cycle's four phases-early expansion, late expansion, early contraction, and late contraction-as well as how to identify and evaluate clients’ relative vulnerability to both inflation and recession. An immediate vulnerability is revenue generation because declining revenues threaten profitability, cash flow, and repayment ability. Inflation reduces profits by increasing cost inputs to the borrower, and a serious threat to both profit and revenue are tariffs. Finally, we live under the threat of both inflation and recession.

Why you should Attend: As borrowers and lenders work their way through the business cycle, borrowers’ credit needs are likely to change, so lenders must be ready to recognize the changes and accommodate their clients’ requirements, and so credit approvers and portfolio managers must be prepared to evaluate, adjudicate, and manage the impact of these changes on underwriting, approval, and monitoring.

What complicates survival in this current economic environment is the combination of elevated inflation and possible recession. Business cycles are inevitable, and bankers must understand borrowers’ funding needs through a cycle's four phases-early expansion, late expansion, early contraction, and late contraction-as well as how to identify and evaluate clients’ relative vulnerability to both inflation and recession. An immediate vulnerability is revenue generation because declining revenues threaten profitability, cash flow, and repayment ability

This session offers some tips on evaluating a borrower’s survivability-what level of sales will generate a profit, how fast can revenues grow without having to borrow more to support the growth, how to reduce costs-in both inflationary and recessionary times.

Areas Covered in the Session:

• Understand how an enterprise’s borrowing needs change over the business cycle
• Diagnose the strength of a company’s financial condition and operating performance in generating cash flow for debt repayment
• Liquidity and seasonal cash cycle
• Leverage-what is right balance of internal funding (retained earnings) and external funding (borrowing and new investment)
• Profitability-profit margins, satisfactory returns on equity and assets
• Solvency-ability to satisfy creditor claims, reward owners, and support firm’s growth
• Determine an organization’s ability to survive over a business cycle and defend itself against both inflation and recession

• Small Business Owners
• Credit Analysts
• Loan Underwriters
• Loan Review Officers
• Commercial Bankers
• Credit Department Managers
• Senior Lenders
• Chief Credit Officers
• Credit Analysts
• Credit Managers
• Credit Risk Managers
• Risk Managers
• Enterprise Risk Managers
• Chief Credit Officers
• Senior Lending Officer
• Bank Director
• Chief Executive Officer
• President
• Board Chairman
• Financial Professionals
• Accountants
• Bookkeepers
• Financial Advisors
• Entrepreneurs who are starting a New Business and Need Financing