4. What is important yardstick in assessment of Term Loan.

Question

Accepted Answer

The repayment capacity of the borrower is the most important yardstick in assessment of Term Loan.

Repayment capacity of the borrower is assessed through various financial ratios such as Debt Service Coverage Ratio (DSCR), Interest Coverage Ratio (ICR), and Loan to Value Ratio (LTV).
The borrower's credit history, income, and assets are also considered in the assessment.
The purpose of the loan, the industry in which the borrower operates, and the economic conditions of the country are also important factors to be considered.
The loan amount, interest rate, and repayment period are determined based on the assessment of the borrower's repayment capacity.
For example, if a borrower has a high DSCR and ICR, a good credit history, and a stable income, they are more likely to be approved for a larger loan amount with a lower interest rate and longer repayment period.

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