Question

Refer to this chapter’s opening feature about Apple. Assume that the owners, sometime during their first five years of business, desire to expand their computer product services to meet business demand regarding computing services. They eventually decide to meet with their banker to discuss a loan to allow Apple to expand and offer computing services.

Required 1. Prepare a half-page report outlining the information you would request from the owners if you were the loan officer.

2. Indicate whether the information you request and your loan decision is affected by the form of business organization for Apple.

Short answer

Answer

The required information is presented in step 1.

Step-by-step solution

Information required by the loan officer from the owners

In this case, the loan officer certain critical information related to the company

1. Assessment of the plan of the company, market, and strategy of the company to achieve success

2. Analysis of the future cash flows and cash receipts

3. Amount contributed by the owners of the business in cash.

Effect on the loan decision

The form of the organization is most important to the loan officer because if there exists a standard partnership the repayment of the loan can be done through the personal assets of the owners as well. The loan officer also needs to know about the financial condition of the owners of the business. If the corporation exists loan officers require guarantees by the shareholders to repay the loan.