Approval, loan documentation and disbursement

摘要

Bank consultation and approval process. Lenders take their loan-making business seriously. No loan is disbursed without having been studied, and approved by many people. A typical loan approval has the following steps. 1. The account officer (AO), primarily responsible for obtaining all the supporting documents to the credit proposal, assesses the application's creditworthiness and the sufficiency and enforceability of the bank's claims in the event of default 2. Afterthe AO's preliminary assessment,the manager forwards a credit proposal to the next level of approving authority depending upon the amount of credit requested. Usually, there are different committees for approving different types of loans. For example, a relatively small loan may onlyneed approval by a credit sub-committee and not need to go through the credit committee that is usually comprised of the bank president plus other members. For medium size loans, the credit committee has to approve. For very large loans, the board of directors must approve. Each financial institution has its own threshold on what constitutes a small, medium or large loan. If the bank uses credit scoring, it will send the rating to the approving authority. 3. The approving authority evaluates the creditproposal based on the documents forwarded by the AO and a credit memo written by the AO's immediate superior and decides whether or not to grant the financing. Normally, the evaluation is based on your creditworthiness, the quality of the collateral, thepurpose of the facility, repayment terms, etc., taking into consideration both subjective and objective evaluation that may be summarized in the credit scores. 4. If the approving authority decides positively, the AO coordinates with the legal department in ensuring that the collateral will protect the lender's interest. The legal department prepares loan documents and sends them to the AO. 5. A senior executive officer of the bank and the borrower sign the loan documents in the presence of witnesses.