Boss Brewing Inc. – Connecting Capital Structure & Credit Structure

Boss Brewing Inc. – Connecting Capital Structure & Credit Structure

Understanding a borrowing request and its associated risks is a critical skill for commercial lenders. In this practice lab, we’ll step into the shoes of a SME lender to analyze a borrowing request from both the lender and borrower’s perspectives, with an eye to understanding how the proposed credit structure may impact the client’s capital structure and other important financial ratios.

We’ll analyze the client’s financial statements and look to identify how their priorities may differ from those of the lender, before working towards a proposal that will satisfy the needs of both parties.

Boss Brewing Inc. – Learning Objectives

• Appreciate how dramatically the intended purpose of loan proceeds can impact a borrower’s capital structure.
• Compare multiple borrowing scenarios and calculate key lending ratios.
• Think critically about how credit structure and capital structure are connected.
• Make appropriate recommendations around a credit structure that satisfies both client needs and bank guidelines.

Who Should Take This Lab?