CASPAR

Question 1

Character and ability

Answer 1

• Is the borrower (and/or its principals) known, competent and trustworthy?
• Do key personnel have the required depth and spread of skills and experience?
• If someone is found to have lied/intentionally mislead, do not lend
• Who introduced them? Can references be obtained?

Question 2

Amount

Answer 2

• Is the amount borrowed reasonable, taking into account the stated purpose?
• How much does the borrower contribute? Who stands to lose most if the project fails?

Question 3

Security

Answer 3

Is there any security in place should the borrower fail?

Question 4

Purpose

Answer 4

• To what use will the monies be put?
• Is the borrower in a sector where there are concerns, or where the total exposure is already sufficient?
• Is the project acceptable on ethical/moral grounds?
• Will the lending be subject to country, currency, environmental, resource, technological or other inherent risk?
• Are there controls to ensure that the monies are correctly applied?

Question 5

Ability to repay

Answer 5

• Is the borrower able to service and repay the debt when due?
• How certain is the source of repayment?
• What margin of safety has been built into the projections and assumptions

Question 6

Risk vs reward

Answer 6

• Is the loan an acceptable risk, given risk tolerance, other exposure etc?
• Are repayment terms (eg interest rate charged) acceptable?