REVIEWER FOR FINAL EXAM

SMALL AND MEDIUM ENTERPRISE DIVISION

1. Define CREDIT.
-the expectation that a sum or money or resources will be returned at some future date,
generally with interest (cost of credit)

2. Define CREDIT RISK.

-risk due to uncertainty in a counterparty’s (or an obligor’s) ability to meet its financial
obligations resulting in a financial loss

3. What are 3 issues in assessing credit risk?

-default probability (cash insolvency / cash inadequacy)
-credit exposure
-recovery rate

4. What are 3 high risk indicators for owners/managers?

-limited business experience
-heavy personal debts
-reluctance to sign personal guarantees
-aging with no clear succession line
-with history of bankruptcy
-fire history is prevalent
-has inadequate plans for the future

5. What are 3 high risk indicators for business ventures?

-relatively new
-engaged in fad or luxury market
-located in a changing neighborhood
-industry has a high degree of business failures
-credit history is spotty and payment record is poor
-with cut-throat competition

6. What are 3 high risk indicators for financial capability?

-high inventory level (old and slow moving)
-increasing receivable collection period
-declining sales and earnings trend
-company debt disproportionate to business equity
-equity centered on questionable assets

7. What are the 7 elements of a Credit Granting Process?

-origination
-evaluation
 -negotiation
-approval
-documentation
-disbursement
-admin/loan repayment

8. What are 5 features of the RIZBIZ program?

-quick TAT credit process
-minimal pre-approval documentary requirements
-fast appraisal and credit investigation
-swift loan assessment by your personalized RMs
-PROGRAM TYPE LOAN APPROVAL

9. In the Small Enterprise Loan Program, what are the 2 credit facility types?
-stand-by credit line / working capital line
-term loan

10. In the Small Enterprise Loan Program, the amounts covered are P_____1M_________
to P____10M__________.

11. What are the 6 On Boarding Documents that need to be submitted by the client?
-3 years AFS and ITR
-business papers (MP, DTI, GIS, Articles and By-Laws)
-6 month bank statements from a major depository bank
-collateral documents (copy of title, tax dec and lot plan)
-valid IDs of applicants (and incorporators if a corporation)
-properly accomplished RizBiz application form

12. What are 8 value propositions of a standby credit line in favor of the loan client?
-working capital requirement
-purchase of raw materials
-building up of inventory
-gapping of receivables
-day to day operating expenses - salaries, wages, utilities etc.
-other short-term business-related purposes
-expansion – term loan
-permanent working capital – term loan

13. Enumerate all types of collateral with their respective loan values.
-commercial/residential – with improvements, used as primary residence or place of
business (80%)
-commercial/residential – with improvements, used as a second home or for lease or
other use (60%)
-commercial/residential – vacant lot, regardless of use (60%)
 -agricultural – with improvements, used as primary residence or place of business (50%)
-agricultural – raw land (40%)

14. What are the 10 primary risk acceptance criteria for the BP/SEL/1:1 Program?
-customer is engaged in a duly-registered business (SEL only)
-customer has been a depositor of the bank for at least 3 months
-customer as no adverse findings
-customer is not PEP
-customer is not classified as high risk
-with satisfactory handling of deposit
-SE line should not exceed 80% of the customer’s 3 months ADB
-3rd party checks are part of the customer’s normal course of business
-should be with recourse to the depositor
-accomplishment of all forms (eg. Agreement on check deposit; compliance with policies
on acceptance of 2nd endorsed checks

15. List 2 instances where BP limits can be used for 2nd endorsed checks.
-customer shortened name(s)
-business/entities controlled by the customer

16. In credit limit setting, the percent of CASA ADB that can be set is as follows:
-BP-Check 200%
-BP-MC 400%
-SEL 80%

17. What are the BP/SEL approving limits?

BP SEL
BRM 500K 250K
RSD 2.5M 1.25M
GH 10M 5M

18. What are the 4 steps for the BP/SEL CA process flow?
-BRO/BRM/BOH prepares BP/SEL CA (soft copy)
-BRO/BRM/BOH sends CA request to ARSD for initial review
-ARSD sends CA to SED (Louie or Ted) for review/endorsement
-If everything is in place, program will be approved. If not, BRO/BRM/BOH is advised to
revise CA