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 sets the memo out section by section, with a specimen and its one-page sibling to download.
The credit case, in the shape a committee reads.
The credit memorandum condenses the pack into the elements a credit decision turns on, and it travels with a one-page summary. It is the document written for the person whose job is to say no.
The credit memorandum, section by section.
| Section | The question it answers | What a credit officer checks |
|---|---|---|
| Credit view | What does the case come to? | That the headline metrics are each supported in the body |
| Executive summary | What is being asked for, and why? | That the ask, leverage and cover stated here match the body and the model |
| Sources and uses | Where does the money go? | That each use is named and the two columns agree |
| Credit metrics | How does the credit look through the forecast? | Whether leverage and cover improve year by year, taken as the borrower’s best case |
| Adjusted-EBITDA bridge | Which earnings carry the leverage? | That each add-back is evidenced, because the multiple is applied to the figure the committee believes |
| Covenant headroom | How much room does each covenant leave? | Each test against its threshold at every test date in the forecast |
| Scenarios | How far can trading fall? | That leverage and liquidity hold in the downside, and which test breaks first |
| Risks and mitigants | What could go wrong? | That each obvious risk is named, with its mitigant and the evidence for it |
Does the deal survive the downside.
The deal team reads the memo as its committee will, for headroom under stress, taking the base case as the borrower’s best argument and testing the downside. A risk register that leaves out an obvious risk tells the committee the borrower has not found it.
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.