Insights

A credit memo is more than a summary of a borrower’s financial performance. It is the underwriter’s case for why a specific risk should be approved on specific terms. This article explains what investment committees evaluate across business quality, cash flow, leverage, liquidity, collateral, risk mitigants and transaction structure—and how borrowers can prepare the evidence and third-party diligence needed to withstand lender scrutiny.

For many founders and CFOs evaluating financing options, one of the first questions is whether their company is better suited for cash flow lending or asset-based lending (ABL). Both structures can provide meaningful access to capital, but they operate very differently. Cash flow loans are typically sized based on earnings performance and credit metrics, while asset-based lending facilities are structured around specific collateral such as receivables, inventory, or equipment