RBC PRO published an article by Evgeny Ivkin (Associate Partner of SBS Consulting, founder of the Institute of Qualified Borrowers) on the problems of scoring models of corporate borrowers.
Banks use scoring to try to understand the business model of companies, but they often make mistakes. 25 questions will help banks to conduct an initial business assessment correctly:
1) Is what you see a competitive business?
2) What does the company earn from?
3) How much personal funds has the owner invested in the business?
4) What kind of person is the owner?
5) Does the shareholder have acquired competencies in the right field over the years?
6) What is the average EBITDA margin in the segment?
7) What distinguishes the borrower company from its competitors?
8) Did the company grow gradually or dramatically?
9) What are the nuances of the company's financial model and business plan?
10) Where has the company already taken the money, what amounts, for what time and at what rates?
11) What is the company's Debt/EBITDA ratio and how has its debt changed?
12) Maybe there was a business, but it's all gone?
13) Is the borrower's niche empty, filled, or quickly filling?
14) What insurmountable limitations does a business have?
15) Is the shareholder trying to involve you in projects that are needed so that his main business does not die?
16) Has the borrower done in the past what he is proposing to do now?
17) Does the company keep up with the market?
18) Where does the borrower get the money for this business?
19) If the revenue, EBITDA, and net profit of the business are higher than the market, then why?
20) What is the area of special competence of the business owner?
21) Is the business built only on loan money?
22) What is the percentage of return on invested money, your own and borrowed (ROE, ROIC)?
23) How much does the business actually cost?
24) How interested is the borrower in doing this business?
25) Does the borrower replace his invested funds with credit?
More detailed: https://pro.rbc.ru/tags/?tag=SBS%20Consulting.