What a credit memorandum looks like.
Every lender that considers a facility writes an internal credit paper to sanction it. A well-advised borrower gets there first: the adviser’s credit memorandum makes the case in the lender’s own format, so the deal team’s paper is halfway written before they start. This page shows what the document is, what a credit committee weighs, and a specimen memo — with its one-page sibling — to download.
The credit case, in the shape a committee reads.
The credit memorandum condenses the whole pack into the elements a credit decision actually turns on: an executive summary of the business and the ask, sources and uses, the forecast metrics, the adjusted-EBITDA bridge with each add-back stated, covenant headroom through the forecast, downside scenarios, and a risk register with mitigants. Where the IM persuades and the deck presents, the memo sanctions — it is the document written for the person whose job is to say no.
It travels with a one-page summary — sources and uses, opening leverage and cover, covenant headroom and the credit highlights on a single page — which is what a busy deal team reads first to decide whether the credit is worth their week.
Does the deal survive the downside.
A credit committee reads the memo for headroom under stress. The base case is taken as the borrower’s best argument; what gets tested is the downside — how far revenue can fall, margins compress or collections slow before a covenant is touched, and what the lender’s position looks like if the plan does not hold. The adjusted-EBITDA bridge is read line by line, because the leverage multiple is applied to the number the committee believes, not the number presented.
The risk register earns its place by being honest. A memo that names the customer concentration, the key-person dependency or the cyclical exposure — and shows the mitigant against each — reads as a borrower in command of its own credit. A memo that omits them reads as one that has not found them yet, and the committee prices accordingly.
The memo and the one-pager, side by side.
Both specimens are built on the same fictional borrower as the rest of the pack — Northstar Components, a £10.5m refinancing — so the whole set can be read together. No real company, no live mandate, and nothing in either document is an offer or advice. Read the one-pager first, the way a deal team would, then test whether the memo answers the questions the single page raises.