Loan Packaging

• Principal Credit/Lending Documents

  • Loan/Line Agreement
  • Receivables Financing/Discounting Line/Agreement
  • Restructuring Agreement
• Availment Documents

  • Promissory Note
  • Disclosure Statement
• Collateral/Security Documents

  • Real Estate Mortgage
  • Mortgage Trust Indenture
  • Chattel Mortgage
  • Assignment of Receivables
  • Joint and Several Signatures/Comprehensive Surety Agreement
• Contract between the lender and the client covering the grant of loan by the former to the latter under certain terms and conditions.

  Loan/Line Agreement
• Core document covering the terms and conditions whereby the proceeds of the credit facility are to be used for financing receivables

  Receivables Financing/Discounting Line/Agreement
• This is used to document new terms and conditions affecting loan transactions in instances where borrower fails to meet his maturing obligations and/or by way of payment arrangement.

  Restructuring Agreement
• An unconditional promise in writing made by one person to another, signed by the maker, engaging to pay on demand or at a fixed or determinable future time a sum certain in money to order or to bearer.

  Promissory Note
• A document disclosing to the client the details of the loans to be released.

  Disclosure Statement
• It stipulates the loan type and purpose, amount, interest rate, penalties and charges, manner of repayment, availment, events of default, representations, warranties, covenants, and other stipulations or provisions not generally covered by the Promissory Note or collateral document securing the obligation.

  Loan/Line Agreement
• It is a principal evidence of indebtedness and is to be considered along with the loan/line agreement.

  Promissory Note
• A contract by which a client or third- party mortgagor secures in favor of the lender the fulfillment of principal obligation subjecting as security immovable (real) properties or real rights over them in the event the principal obligation is not fulfilled at the time stipulated.

  Real Estate Mortgage
• trustee for the purpose of securing numerous creditors

  Mortgage Trust Indenture
• Similar to REM except that the subject is chattel or personal property

  Chattel Mortgage
• A bilateral contract whereby one person transmits to another his rights, title, interests and actions against a third person either by way of payment or as a security.

  Assignment of Receivables
• Binds the key officers and management solidarily or severally with the principal borrower making them liable in case of default/non-payment due to misappropriation, fraud, mismanagement, etc.

  Joint and Several Signatures/Comprehensive Surety Agreement
• refers to proper provision of credit support, control systems and other practices necessary to manage outstanding risk assets. Timely repayment of obligation by a client is an indicator or good credit administration.

  Account monitoring and credit administration
• Major Areas of Account Monitoring

  1. Compliance to Terms and Conditions
  2. Collection of Loan Amortization
• Collection of Loan Amortization

  a)Prompt Payment of Accounts

  b) Collection of Past Due Obligations

  c) Compliance with Key Covenants

  d) Periodic Submission of Requirements

  e) Monitoring of Industry Situation

  f) Appraisal/Inspection of Collateral
• refer to all the documents that are related to the account.

  Credit files
• Availments under the approved credit facilities should conform to the terms and conditions stipulated in the approved credit proposal

  Compliance to Terms and Conditions
• All outstanding loans must be monitored closely to ensure prompt payment at maturity of the amortization and any other charges or expenses associated with the transaction

  Prompt Payment of Accounts
• Past due obligations for collection should be properly handled. Remedial actions should be promptly instituted to keep the account in current status

  Collection of Past Due Obligations
• Loans must be monitored periodically to ensure compliance with key covenants, repayment schedule, and other terms and conditions governing the loan

  Compliance with Key Covenants
• Borrowers with outstanding credit facilities should submit the documents that are required on a period basis as stipulated in the loan agreement.

  Periodic Submission of Requirements
• Industry and market developments should be regularly monitored and the impact of any development in the industry on the loan account be evaluated. If the industry development signals a potential problem, a client call to discuss the issue with the borrower should be conducted as soon as possible.

  Monitoring of Industry Situation
• Periodic inspection and appraisal of supporting collaterals must e done to validate the conditions/existence and adequacy of collateral vis-à-vis the outstanding risk

  Appraisal/Inspection of Collateral
• __by a client is an indicator or good credit administration.


  Timely repayment of obligation
• must be observed.

  Fund matching principle
• shall be proposed for short-term credit requirements

  Short-term facilities
• shall be considered for medium or long-term requirements

  term facility
• should be flexible and responsive to the specific situation of the client, the changes in the particular industry/sector of the client, changing economic environment, and the market trends in the financing industry

  The terms and conditions
• Common sense and good judgment is a must in structuring a credit package.
• Credit decision cannot be based entirely on a static set of credit guidelines or analytical technique. A proactive stance is thus a must.
• The structure of a credit package, including the terms and conditions should be clearly stated.
• The repayment mode and tenor shall be structured based on the purpose of credit being applied for
• All the deviations from the standard terms and conditions shall be highlighted and justified in the proposal
• contains the highlights of the proposal such as: information on the client/applicant, the project description, the type, amount,

  major terms and conditions, recommendation and justification

  Credit Proposal Executive Summary
• contains the detailed information on the: applicant, the project, the results of evaluation of the financial performance/ historical financial statements, projected financial statements, results of credit investigation, marketing aspects on the project, plans and prospects

  Credit Proposal
• the results of the credit investigation conducted

  Credit Investigation Report
• covers the results of the appraisal conducted on the coLlaterals offered

  Appraisal Report