Conditions
(5) Conditions. This paragraph (b)(5) refers to the general business environment, including the regulatory environment affecting the business or industry, and status of the borrower's industry. Consideration will be given to items listed in paragraphs (b)(5)(i) through (ix) of this section and when applicable the lender should submit supporting documentation (e.g., feasibility study, market study, preliminary architectural or engineering reports, etc.) in accordance with 5001.304 through 5001.307: (i) Availability and depth of resource/feedstock market, strength and duration of purchase agreements and availability of substitutes; (ii) Analysis of current and future market potential and off-take agreements, competition, type of project (service, product, or commodity based); (iii) Energy infrastructure, availability and dependability, transportation and other infrastructure, and environmental considerations; (iv) Technical feasibility including demonstrated performance of the technology and integrated processing equipment and systems, developer system performance guarantees, or technology insurance; (v) Complexity of construction and completion, terms of construction contracts, experience and financial strength of the construction contractor or engineering, procurement, and construction (EPC) contractor; (vi) Contracts and intellectual property rights, licenses, permits, and state and local regulations; (vii) Creditworthiness of any counterparties, as applicable; (viii) Industry-related public policy issues; and (ix) Other criteria that the lender or Agency deems relevant to the project. (6) Content. The credit evaluation must be sufficiently detailed to describe the proposed loan, business and project scenario and document that the proposed loan is sound. The credit evaluation must include: (i) A written evaluation of each credit factor listed in paragraphs (b)(1) through (5) of this section and any additional factors as appropriate; and (ii) A written evaluation of the feasibility study, business plan, technical report, and engineering and architectural reports, as applicable; and (iii) Spreadsheets and analysis of the financial statements provided in accordance with 5001.303, with appropriate ratios and comparisons with industry standards (such as Dun & Bradstreet or the Risk Management Association). The spreadsheets should enable a reviewer to easily scan the data, spot trends, and make comparisons. Steps taken or proposed to address any financial or industry weakness must be reasonable and adequately addressed. (iv) Financial projections deviating from historical financial performance must be substantiated and documented. The borrower's projections should be consistent with their past performance. Increases to revenues, profit margins or profitability should be reasonable and substantiated in the analysis. (v) Projected operational cash flow analysis on a quarterly basis for borrowers with seasonal cyclical cash flow. (vi) Operational cash flow analysis on a quarterly basis from the current financial statements through start-up or occupancy for projects involving construction when lenders are requesting the loan note guarantee prior to completion of construction The lender and borrower are required to provide a construction schedule with their application for a loan guarantee prior to construction completion. The projected cash flow needs should mirror the quarterly construction costs as the project is being completed. The cash flow analysis must indicate whether this cash flow is being provided by the guaranteed loan, borrower equity, or other sources.