Baratelli Credit Services
Underwriting support for banks and lenders. Independent quality of earnings for transactions.
Two things decide a commercial credit: whether the earnings are real, and whether the file supports the decision if somebody examines it later. Baratelli Credit Services does that work from the borrower's own records — the general ledger, the bank statements, the payroll reports and the agings — and hands back the computation with the support attached to every number. Every report is reviewed by a US CPA.
Underwriting services for banks and lenders
Engaged by the lender, performed on the lender's file, priced per file before any work starts.
Three fiscal years and a trailing-twelve-month column spread from the borrower's general ledger rather than from a summary the borrower typed, with every adjustment listed and traced to its source.
Coverage rebuilt from the records: existing debt service read off the actual notes, the new payment at your terms, each add-back tested rather than accepted, and a sensitivity on revenue and rate.
Eligibility, size, use of proceeds, equity injection and the change-of-ownership conditions read against SOP 50 10 8.1, with the exceptions named before the file reaches credit.
The 7(a) package assembled and tied out: forms, historical and projected financials, use of proceeds, and the schedule each figure comes from.
Certificates verified against the agings and the ledger, ineligibles applied as the loan agreement defines them, availability recomputed, and the collateral schedule reconciled to the fixed-asset records.
Each covenant tested as written in the agreement, period by period, with the computation shown and the cushion stated rather than asserted.
Existing files graded on one consistent rubric: what is missing, what is stale, and what would not support the credit if it were examined today.
Quality of earnings for transactions
Independent of the buyer, the seller and the company, in writing, before any work starts. Process, testing and scope.
The report SOP 50 10 8.1 requires on a change of ownership at $3 million or more: proof of cash for the trailing twelve months and the last two fiscal years, every seller add-back tested against the ledger, wages tied to Forms W-3, and the earnings your credit decision can rest on.
The earnings behind the price before you sign: add-backs tested, revenue proved to deposits, working capital measured against a normal level rather than the closing balance, and the debt-like items the price should carry.
A seller's own review before going to market. It does not satisfy the lender's requirement — that report has to be ordered by the lender — but it finds the issues while there is still time to fix them.
Independence and conflicts, stated plainly
- One engagement letter, signed before anything is sent. It names who engaged us, confirms independence from the buyer, the seller and the company, and fixes the fee.
- The fee never depends on the outcome. Not on whether a transaction closes, not on whether a credit is approved, and not on what the work finds.
- Baratelli Bankable is disclosed, not relied on. Bankable is a free accounting program from the Institute, and some borrowers keep their books in it. Where that is the case the engagement letter says so, and the testing still runs against source documents — bank statements, payroll reports, Forms W-3, agings — rather than against anything the program produced.
- We do not also represent the borrower. Where the Institute has an existing relationship with a party to the file, the work is declined rather than disclosed around.
- A US CPA reviews every report and signs it.
Fees and turnaround
Quality of earnings is priced on the purchase price, half on signing and half on delivery; the table is on the quality of earnings page.
| Underwriting engagement | Basis |
|---|---|
| Single-file work — write-up, coverage, SOP review, packaging | Fixed fee quoted per file |
| Borrowing base and covenant monitoring | Fixed fee per period |
| Portfolio file review | Fixed fee per file reviewed |
Every fee is quoted in writing from the document list before work begins, and none of them is contingent on the credit decision. Turnaround runs from complete information.
Why the file arrives faster
The same computations are built into Baratelli Bankable and are free to the borrower: nine screens under Loans and planning cover loan readiness, underwriting clean-up, SBA borrowing capacity, the loan package, the collateral schedule, collateral availability, the borrowing base certificate, a cash flow forecast and an acquisition model. A borrower who has run them arrives with the package already assembled in the layout this desk asks for, which shortens the engagement and narrows what there is to argue about. A borrower on any other system is no harder to work with — the records are what get tested either way.
To engage, or to see the Delta Fastener sample quality of earnings report and workbook: Philip A. Baratelli, CPA · philbaratelli@gmail.com · 904-846-3011 · www.baratelliinstitute.com.