![template for credit memo template for credit memo](https://templates.invoicehome.com/credit-memo-template-us-boulder-750px.png)
In a similar vein, we have run sentiment analysis on a variety of credit memos and have presented our analysis HERE. The writer of the credit memo should be persuading the reader to approve the credit however, the credit memo must lay out the pros and cons of the loan fitting the bank’s credit framework. In other words, a credit memo is an opportunity for a lender to be an advocate for the borrower using objective analysis and logical reasoning. Advocacy loses its persuasion if the analysis is based on feelings, is biased, or is simplistic. The credit memo should serve to persuade while acknowledging that every loan has risks. Persuasive: The main theme in a credit memo should be objective persuasion. Therefore, it is not a pertinent risk of a specific loan. Good credit memos will identify the top three to five risks and then show how each risk is protected or mitigated in the structure, pricing, cash flow, collateral or other support.
![template for credit memo template for credit memo](https://templates.invoicehome.com/credit-memo-template-us-hightech-750px.png)
Risks Upfront: The overarching objective of the credit memo is to outline the pertinent risks of the loan and identify the mitigating factors to those risks. Every loan has some risks, and some loans have more risks than others. However, credit adjudicators (executive management, loan committees and board of directors) do not want to see ten main risks. The drafter’s job is to identify three to five main risks and then identify and explain fully those risks and the mitigation to those risks. We sometimes see memos with a laundry list of risks, but a drafter’s job is to identify the pertinent risks for that credit. Further, risks that affect all credits need not be mentioned. A recession will impact every borrower’s ability to repay the loan. These recommendations are not related to underwriting or credit analysis, but rather on the general content, style, and layout of the effective credit memo.
![template for credit memo template for credit memo](https://images.wondershare.com/pdfelement/forms-templates/medium/credit-memo-template.png)
We review hundreds of credit memorandums every month from a wide variety of community banks across the country. Generally, the credit memos are carefully considered, well planned and appropriately formatted. We read memos from banks ranging in asset size from $100mm to over $10B and loans ranging from $250k up to just over $50mm. We look at memos for annual reviews and submission for new CRE and C&I loans. While most bankers are skilled and proficient at formatting and arranging the layout of the credit memo, we would like to share our top recommendations for bankers for drafting better credit memos.