Part III – RECEIVING YOUR LOAN OFFER
In reviewing your application, the bank will generally consider several factors. Popular among the factors are the so-called 5 Cs of credit. These are Character, Capacity, Collateral, Capital and Conditions. In addition, most lending institutions have other internal and regulatory considerations to make.
Having first discussed with your aaccount officer however, we can assume that you have met at least a few of their conditions. The others, they can only consider upon submission of your application. In dealing with lenders, another reality also is that, from initial discussions to your submitting your documents, most of them know if they are amenable to granting you the facility or not. So do not let them waste your time. Make it clear you need a decision one way or the other in good time. Government interventionist agencies are the ones that generally take longer to make a decisions. In recent past however, they have also really improved upon their response time.
- Review terms of your loan offer:
Upon approval of your loan request, the bank will send you a facility offer letter. This offer is a contractual document detailing the bank as the lender; you as the borrower; the facility amount; facility purpose; collateral details; repayment terms; etc. It will also indicate what the conditions precedent to drawdown are.
Reviewing your offer with your legal and financial advisor is absolutely necessary. If there are any terms that do not meet your expectation, or were not initially discussed, or yet are unnecessary, bring them to the attention of your lender. Do not accept terms that are unreasonable or impossible to meet. Realise however that changing the terms of an offer letter is a whole credit review process on its own and can take some more time. If you are able to convince your bank, they can get it done though.
- Accept the Offer:
Once the terms of your offer letter are reasonable, you can accept it, return the bank’s copy and keep yours. Your offer letter and other related documents are very important and should be securely kept. They are the kind of documents you should keep copies of in a different location away from your office to safeguard against unexpected disasters.
- Meet conditions precedent:
As we mentioned earlier, most facility offers will come with ‘conditions precedent’ to utilization. In your review above, you would have identified what these terms are and work to meet them. The earlier you are able to meet the conditions, the earlier the bank will disburse your loan. As soon as you meet the conditions, the bank will disburse the facility amounts as agreed for your use.