A loan creates a commitment that continues even when income falls or a project is delayed. Identify the assumptions on which the repayment plan depends most heavily.

Consider variable interest rates, foreign-currency exposure and the consequences of providing security or a guarantee. These features can change both the size and the nature of the commitment.

Build a realistic response to a weaker outcome. Early communication about repayment difficulties is more useful than waiting until a missed payment has already occurred.

Key takeaways

  • A loan creates a commitment that continues even when income falls or a project is delayed.
  • Consider variable interest rates, foreign-currency exposure and the consequences of providing security or a guarantee.
  • Build a realistic response to a weaker outcome.