Standard Field Examinations
Our standard collateral field examination involves an on-site inspection and evaluation of a borrower’s pledged collateral, including a physical assessment of the pledged asset, verifying its ownership and conditions, and assessing its market value to ensure it adequately secures the loan amount. The Collateral Examiner will issue a detailed report to the lender to help in their credit decision making.
Key components of a collateral field examination:
- Documentation review: Examining loan documents, related agreements, and other supporting paperwork related to the collateral.
- Physical inspection: Examining the physical state of the collateral asset, such as inspecting a property for structural integrity, checking equipment for functionality, or performing a test-count on inventory to verify existence.
- Title verification: Confirming legal ownership of the collateral by reviewing property deeds, titles, and other relevant documentation.
- Appraisal review: Obtaining an independent appraisal to determine the current market value of the collateral asset, especially for real estate or large equipment.
- Lien checks: Verifying whether any liens or encumbrances exist on the collateral that could affect its value or the lender’s claim.
- Insurance verification: Checking if the borrower has adequate insurance coverage on the collateral to protect against damage or loss.
- Site visit: Visiting the location where the collateral is stored or used to verify its existence, assess its condition and ease of access.
Important factors to consider during a collateral field examination:
- Type of collateral: The specific steps involved will vary depending on the type of collateral, such as real estate, machinery, inventory, or accounts receivable.
- Loan amount: The size of the loan will impact the level of scrutiny applied to the collateral evaluation.
- Borrower’s creditworthiness: The overall credit profile of the borrower may influence the depth of the collateral review.
The Collateral field examination serves the following purposes:
- Risk mitigation: To assess the potential risks associated with the collateral and ensure it provides sufficient value to cover the loan in case of default.
- Loan approval decision: To inform the lender’s decision on whether to approve a loan based on the quality and value of the collateral.
- Loan monitoring: To periodically review the condition of the collateral throughout the loan term to maintain appropriate risk management.
Pre-loan / Pre-funding / Survey Examinations for a lender considering any type of financing. ABL, Term Loan, Factoring, MCA, Real Estate, etc.
Workouts and Liquidations
Merchant Cash Advance examination. Tailored for Revenue Based Financing lenders in the MCA space to address specific risks such as KYC, fraud, verification of business location and quick view of operations.
Inventory only examination including On-site Test Counts, multi-year inventory turnover analysis, review of slow moving and obsolete inventory, mark to market analysis, cost testing, conversion analysis.
Remote Accounts Receivable only collateral examination including confirmation, multi-year A/R roll-forward and turnover analysis, cash application test if deemed necessary. .
Inventory Appraisals including Net Orderly Liquidation Value assessment backed with industry references.
KYC checks on prospects: to assess business legitimacy, check references including credit & background.
Cashflow Analysis using Z-Score model to determine likelihood of business failure within a year+.
Annual SBA Reviews
Borrower Support Services: Borrowing Base Preparation, Helping borrowers understand Loan agreements and reporting requirements, covenants, BBC Report preparation, Audit Support, Answering queries from lenders.
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.