Capability Building on SME Risk-Based Lending

To inquire more about our courses, you may call our Program Sales Officers at 830.20.50 or email us at cce-abib@aps.ateneo.edu.

This course offers a customized approach in the credit assessment of small and medium enterprises (SMEs). It reexamines established credit principles and processes, and refocuses these for effective SME lending applicability. The alternative credit assessment approaches and activities the course provides deviate from the traditional evaluation processes used for commercial credit applicants; recognizing the uniqueness of SMEs as a business sector, these have a strong SME slant.

Successful completion of the course enables the participants to:
    1.    Obtain credit information from alternative sources to understand the various risks involved in SME lending;
    2.    Validate and effectively use the financial statements submitted by SME applicants;
    3.    Trace and assess the business cycle/s of credit applicants to identify and assess their financing needs, financing sources, and cash flow sources;
    4.    Assess specific credit risks for a more informed credit decision; and
    5.    Determine and develop the appropriate credit package for applicants.

The course, which employs lectures, interactive discussions, case analyses, and practical application exercises, covers the following areas:

I.        INTRODUCTION
    A.    Course coverage, objectives, format
    B.    Terminologies and definitions
    C.    Basic credit principles – includes the “Ten Commandments of Commercial Credit”
    D.    Conceptual view of the bank credit universe
        1.    Potential risks in credit
        2.    Transaction analysis
    E.    The credit process flow
    F.    Elements of sound credit

II.    SME CREDITWORTHINESS ASSESSMENT
    A.    Understanding SMEs, their financing needs and wants
    B.    Credit evaluation objectives
    C.    Credit evaluation approaches
    D.    Suggested activities in evaluating SMEs
    E.    Information requirements
    F.    Key financial performance indicators
    G.    Early warning signals

III.    SME PERFORMANCE ANALYSIS
    A.    Evidence examination
        1.    Financial statements
        2.    Trend/Time series analyses
        3.    Ratios, averages, turnovers
        4.    Financial condition analysis
        5.    Cash flow analysis
        6.    Working capital analysis
    B.    Management evaluation
    C.    Industry analysis (as appropriate)
    D.    Financial statement validation techniques
    E.    Credit risk rating

IV.    CREDIT SUPERVISION (interspersed above, as appropriate)

V.     SUMMARY EXERCISES, CREDIT RISK RATING EXERCISE, CASE STUDIES
(as time permits)

is the Director for Credit Programs at the Ateneo-BAP Institute of Banking, the Program Director for Finance at the Ateneo Center for Continuing Education, and a professor of Finance at the Ateneo Graduate School of Business.