Portfolio Activity 4

Every manager has different skills, and specialties of expertise. It is quite possible

that you could be in a situation where you see something that someone else does not

see, especially if they are working under you with less education or experience than

you. If a loan officer working under you recommends a loan to a customer, describe

(A) when you would authorize that loan, and (B) when you would deny the loan in

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each of the following cases and give your rationale.

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1. You disagree with your subordinate because you do not think restaurants are

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good investments in general, so you have a bad feeling about this customer's ability
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to repay the loan based on your experience with the market rather than any

financial facts.
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a) If the loan is to be approved supported the recommendations from the loan officers, the

most factors to be thought of would be the monetary data of the receiver instead of the
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character of the investment. The investment undoubtedly would bear some risks however
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the borrower’s flexibility in getting funds from alternative sources to clear the loan would
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be key. The monetary information or data from the receiver could also be evaluated from
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the previous credit, the annual or monthly money inflows, and the varied assets which

will be used as collateral among others. The loan officer thus must argue on the idea of
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such factors to confirm that I am convinced to approve the loan for the required

investment goal.

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 b) The decision by me to not authorize the loan depends on the peril of the restaurant as

an investment and also my perception. The loan call would believe the peril of the

restaurant investment to be pursued if the monetary facts from the potential receiver fail

to persuade by me. The additional inquiry would, therefore, be directed to the expected

returns from the restaurant. If I considerably realize that the restaurant investment is risky

and would place the organization funds in danger, the loan would be denied. The choice

to deny from my side might also return from the negative perception towards the

customers. This can be as a result of if I feel the client ability to repay the loan is

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restricted supported his expertise on the varied styles of restaurant investment within the

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market.

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2. You disagree with your subordinate because you think medical operations are
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high risk for legal problems, so you have a bad feeling about this customer's ability
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to repay the loan based on your experience with the law rather than any financial
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facts.

There are industries that underwriting the chance would place the bank in danger and
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medical operations could be a high risk because of their legal issues thus it'd be a decent

decision to deny the loan. Approving loans are supported several realtors as well as risk
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and because of the high risk, this business would exposure the bank to denial would be
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acceptable when an intensive monetary fact check.

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3. You disagree with your subordinate because you think members of their family

are business failures, so you have a bad feeling about this customer's ability to repay

the loan based on your experience with social history rather than any financial facts.

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 a) Relying on monetary knowledge is essential to the following decision on the

authorization. In such a case, the loan would be approved if I provide larger thought to

the monetary data instead of different factors. In determining the credit rating of a person,

the loan officers would be needed to access the historical information on the particular

client instead of the general performance of the family. The family factors that reflect on

the failure of the individual might not apply to an individual who is way responsive in

managing the funds and investments. The info from the past monetary performance and

credit reimbursement would be key within the method of approving the loan in such a

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scenario.

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b) On the other hand, counting on the family data and therefore the generally negative

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perception from the loan officer may additionally impact on the authorization. Because of
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that, I would deny the loan once the info of family being business failure outweighs the
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monetary information given by the receiver or client. The information on the closed
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corporation failures will typically influence is an awfully vital issue when evaluating the

extent of risk on the given loan. This means the loan officer will depend upon such a
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reality to deny the loan. Although such a choice could seem debatable, the method of the
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authorization will typically rely upon private factors. However, it's suggested that the

monetary facts and risk level be the most basis for creating choices on the authorization.
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4. You disagree with your subordinate because you just have a bad feeling about this

customer's ability to repay the loan based on your gut instinct rather than any financial
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facts.

a) The decision to authorize a loan principally depends on monetary facts. The monetary

facts will embody the credit rating, the supply of financial gain and therefore the

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 performance supported the previous loan offers. However, other personal attributes might

impact the method of loan authorization. In such a case, I would authorize the loan if the

monetary facts would be ready to persuade him to assume otherwise. The monetary facts

on the client will show sensible credit rating and performance. Additionally, the loan

officer also can play a crucial role that may create me to obviously change my mind and

provides out the credit. This is able to be supported by the varied assessments created on

the monetary performance of the individual.

b) On the contrary, I wouldn't authorize the loan if I ignore the monetary facts and

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focuses on the unhealthy feeling on customer's ability to pay. This would be a lot of

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personal factors influencing the choice to approve the loan funding. The unhealthy

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feeling on the client may be supported by the manner they interacted and negative
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perceptions that may be developed. This is able to but be thought of unethical because the
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individual targeted on non-essential factors once creating the choice. This can be as a
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result of the customer's ability to repay the loan depends on the monetary facts like the

financial gain generation and therefore the nature of investment pursued.

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 References:

Brown, Y. (n.d.). Advantages & Disadvantages of Small Business Lending Companies.

Retrieved from https://smallbusiness.chron.com/advantages-disadvantages-small-

business-lending-companies-22866.html

Peavler, R. (January 21, 2019). Reasons to Take out a Business Loan. Retrieved from

https://www.thebalancesmb.com/four-reasons-to-take-out-a-business-loan-393255

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