Deciding on the Loan Request

As Mr' Ferrer reflected on the case, several issues came up. The loan was replacing part of the capital that was being cashed out of the company by its principal. Although Imperial Bank ha'd a reputation of being a very aggressive regional bank, was Belmont Marine u ."*onuble and prudent risk to take? Was Belmont's cash flow sizable enough to service the debt? Mr. Ferrer had the following information available to answer this question.

Contracts on books (for next 2 years) $22.455,521

Total estimated cost $9.200,000

Contracts billed to date $11.478,210

Costs incurred to date $4.314,987

Mr' Ferrer realizedthat the ,urn" io* request was at the table with Southwest Bank.To lure Belmont away from Southwest Bank the pricing would have to be very competitive. The rate of interest being considered is 12 percent (N.y. prime minus 25 basis points).

Based on the above data and the information prwided in the Exhibits:

1.) Identify at least three positives and three negatives about the loan request (use bullet statements or phrases).

2.) Discuss at least three but no more than five critical issues that can make or break this loan request.

3.) Make a recommendation to the loan committee on this request and provide the necessary reasoning.