Whilst appraising borrowers’ plans and forecasts it can be difficult to establish whether they are achievable, and will result in the maximum and most timely repayment of loans.
A further difficulty arises in monitoring the borrower’s ongoing adherence to the plan.
We are experienced in conducting detailed reviews of borrowers’ business plans, and assessing whether they are credible and achievable. As part of these reviews we consider the following:
- Validity of assumptions made,
- Valuation of assets,
- Reliability of borrower’s income stream,
- Necessity of borrower’s proposed overhead costs,
- Method employed in forecasting or modelling,
- The borrower’s capacity to deliver the forecast outcomes.
We also consider whether the borrower’s proposals are likely to yield the most favourable outcome for the lender, and if a different approach is warranted.
We are also experienced in conducting ongoing monitoring of borrowers adherence to plans agreed with their lenders.
Whilst conducting monitoring exercises we report on an “exception basis”. This means that our reports immediately highlight any deviation from the plans agreed between the lender and borrower.
Our reports also distinguish between variations from forecast that result from events internal and external to the borrower.
Our experience is that where borrowers are subject to ongoing scrutiny they are more diligent in adhering to plans agreed with their lenders.