Cumulative level test: Underwriting judgement, file discipline and defensible recommendations

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12 questions · 80% to pass · no timer. This longer test revisits both units in the level. These authored questions assess recognition and application of the taught distinctions, not professional qualification. You may review the lessons and retry. Repeat attempts reuse the question bank; a remembered answer is not proof of transfer to a new situation.

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Question 1

A merchant applies for $95,000. The file has four of twelve months of bank statements, a UCC search showing no entity filing but one filing under an owner's personal name, a processor report covering the same four months showing receipts of $61,400, and no business tax return. The merchant says the year was worth about $400,000 and that a prior advance was paid off. Walk through the sequence that turns this into a defensible recommendation.Write the claim ledger: four documented months, eight absent, a personal-name filing unresolved, no tax return, no payoff document. Normalise the four months of receipts to about $15,350 a week and size against that rather than the asserted year, noting that the four months exclude the seasonal peak. State the verification plan: eight missing statement months, the tax return or transcripts, a payoff letter from the prior funder and a fresh search covering the owner's personal name. Recommend a conditional counter-offer sized to the evidence, with concentration and seasonality checks requested because neither can be assessed on four months.Treat the $400,000 assertion as the operating figure because the merchant has operated for years, note the personal filing as an owner matter outside the business, and recommend the requested amount subject to receiving the tax return.

Question 2

Two files both fail. File one fails because the requested amount exceeds what the trough can carry; file two fails because two of the five items needed to assess collateral cannot be produced. How should each refusal be written?Both get the same note, stating that the file does not currently meet criteria and inviting a new application in ninety days, since explaining the reasons might invite disputes about the analysis.File one gets the arithmetic: the requested remittance against the trough month, the largest remittance that meets the stated coverage, and the conditions under which the larger amount would be revisited. File two gets the document list: exactly which items are missing, who can produce them, and confirmation that the answer would be reconsidered on receipt, with an interim size stated if one is supportable.

Question 3

A merchant's twelve weeks show $198,000 of deposits including $22,000 of owner transfers and $14,000 of insurance proceeds. Existing debits are $2,200 a week and the funder proposes $1,900 a week. Separately, the merchant is six weeks into an obligation with $15,600 remaining out of a $52,000 total, and asks for a renewal offering $36,400 of new proceeds with a $68,640 total. Combine both analyses into one recommendation.Normalised deposits are $162,000, or $13,500 a week; existing and proposed obligations total $4,100, which is 30.37 percent of normalised deposits. On the renewal, finishing the remaining $15,600 and taking a fresh $30,000 at a factor of 1.32 gives $55,200 of total payments against $68,640 on the renewal, a difference of $13,440 or 24.35 percent. Recommend against the renewal unless the money is needed in the next six weeks, and size any new obligation to the normalised deposit figure rather than the gross.Normalised deposits are $198,000, or $16,500 a week, so obligations are 24.85 percent; the renewal is acceptable because the new weekly payment is lower per remaining week than the current one.

Question 4

A merchant's receipts run from $38,000 in the weakest month to $72,000 in the strongest, averaging $54,791.67, and the funder proposes a fixed $5,600 weekly schedule. The merchant is also told the structure is percentage-based with a true-up. What should the recommendation say?The schedule is 44.29 percent of average monthly receipts, which is acceptable, and the percentage description can be relied on because the funder names the structure in the agreement.The fixed schedule equals $24,266.67 a month, which is 63.86 percent of the weakest month and 33.70 percent of the strongest, and it exceeds 45 percent of receipts in six of twelve months, so the structure does not match the season. If a percentage structure is claimed, the recommendation must specify the records that establish actual receipts, the interval for reconciliation, who computes it, how the difference is credited, and what happens if two periods pass without one; otherwise it should be treated and sized as a fixed debit.

Question 5

A merchant has $980,000 of revenue, $220,000 of eligible receivables, one customer representing $607,600 of revenue and $136,400 of receivables, a 25 percent single-obligor limit with an 80 percent advance rate, and 96 percent of receipts through one processor. The merchant wants $176,000 and needs $70,000 for inventory over six months plus $50,000.37 for a seven-year machine. What is the recommendation?Availability is $110,880 with the limit applied, not $176,000, so the requested amount is unsupportable on the receivable base. The needs analysis separates $70,000 of six-month working capital from a $50,000.37 seven-year asset, which should be matched to different terms, and the processor dependency calls for a second processor, a notice obligation or a reserve of at least a week of receipts. Recommend the matched structure at the supported size, not the requested amount.Availability is $138,600 because the concentration limit reduces the eligible base by the customer's excess, and the requested amount can be supported by adding the equipment as additional collateral.

Question 6

A merchant's guarantee is unlimited and joint and several between two owners, the agreement contains a springing dominion right at fifteen percent availability, and the broker is paid by the funder at a rate that is higher on the larger option. What must the merchant be told before signing?That the guarantee is shared equally between the two owners because both signed, that the availability threshold is a technical covenant that will not be exercised while payments are current, and that the broker's compensation is confidential commercial information.That either owner can be pursued for the full remaining balance and that the split between them is a separate matter; that availability of $110,880 makes the fifteen percent threshold $16,632, with the notice period, cure route and effect on working cash explained; and that the broker is paid by the funder at a stated rate on each option, including what the smaller option pays.

Question 7

A merchant is $7,600 behind, $22,300 remains, and collateral with an appraised orderly liquidation value of $31,000 is realised by a quick sale for $18,000. The guarantor asks what the funder can now claim. Walk through the position and the conduct requirements.The $18,000 is applied to the balance, leaving a shortfall that can generally be claimed against the guarantor under the guarantee, subject to the documents and to law. The $13,000 gap between orderly liquidation value and the quick sale is the reason the commercially reasonable standard applies to every aspect of a disposition, including method, manner, time, place and price, so the funder should be able to show what was done and why; the guarantor should obtain legal advice about the shortfall.Realising the collateral discharges the obligation, so the funder can claim nothing further from the guarantor once the assets are sold, and the difference between appraisal and sale price is a loss the funder must absorb.

Question 8

A merchant holds three obligations: a daily card advance at $120 a day, an equipment loan at $610.42 a month and a weekly advance at $1,450. A consolidation is offered that leaves the equipment loan untouched. What must happen before the word consolidation is used?Describe it as a consolidation because it replaces two of the three obligations and simplifies the payment calendar, with the equipment loan excluded since it is secured on a specific asset.List every obligation with its remaining balance and obtain a dated payoff letter for each one being retired, repay each, confirm what happens to the related filings, and compute total dollars and dates before and after. If the equipment loan remains in place, the transaction is a new obligation alongside it, and it must be described and priced that way.

Question 9

A merchant has $21,400 of normalised weekly receipts, a 38 percent gross margin, $2,100 of existing weekly obligations, $2,900 of weekly fixed cost, a trough-to-peak ratio of 0.53 and one customer at 62 percent of revenue. The request is a $2,450 weekly remittance. Write the decision with its conditions.Contribution is $8,132 and obligations plus fixed cost would be $7,450, giving coverage of 1.09, which is thin before tax, before the trough and before the concentration finding. Recommend a counter-offer of $1,900 a week for 1.18 coverage with total debt service at 18.69 percent of receipts; the largest remittance reaching 1.15 coverage is $2,071.30. Decline the requested amount today with reasons, and set conditions: eight weeks of statements showing contribution of at least $9,000 a week, the largest customer below 40 percent, no returned items in sixty days, and a second processor in place.Coverage of 1.09 is above one, so fund the requested amount and note the concentration and season as monitoring items to be reviewed at the next scheduled check-in.

Question 10

A merchant shows $310,000 of six-month deposits including $45,000 from a new lender, $19,000 of owner transfers and $8,000 of tax refunds, with existing debits of $3,100 a week and seven returned items. The requested remittance is $2,300 a week. What does the analysis support, and what must still be checked?Normalised deposits are $310,000, giving roughly $11,923.08 a week, so the $5,400 of obligations is about 45 percent of receipts and the returned items are a minor administrative matter.Normalised deposits are $238,000 for the window, or about $9,153.85 a week if the window is twenty-six weeks, and existing plus requested obligations are $5,400, which is close to 59 percent of that weekly figure; the file needs the returned items explained and the timing of the existing debits before any commitment.

Question 11

A filing taken on 2026-03-01 secures an advance, a renewal is proposed that pays off the outstanding balance in full, and an owner holds a separate filing recorded under their personal name against business assets. What does the analysis need to record?That the filing taken on 2026-03-01 remains effective for five years to 2031-03-01, with continuation available only within the six months before expiration from 2030-09-01; that paying off the balance does not by itself terminate a financing statement, so a termination or amendment should be obtained and confirmed; and that a filing under a personal name must be read on its own terms because it will not appear in a search of the entity name, affecting both priority and the guarantee discussion.That the renewal automatically terminates the earlier filing because the underlying obligation is satisfied, and that the personal filing is irrelevant to the business's assets since it names an individual rather than the company.

Question 12

An advisor's note states that the recommended facility offers the fastest approval available, that the merchant should sign before a promised rate change, and that the commission structure need not be disclosed because the merchant did not ask. The merchant's need is $45,000 with a $9,000 dollar cost, and the alternative of $80,000 carries $28,000 of cost and pays the advisor $1,725 more. Rewrite the substance of the note.Keep the speed and deadline language as ordinary negotiation, disclose the commission only if the merchant asks directly, and recommend the $80,000 amount because a larger facility gives the merchant more room to grow.Remove the unsupported speed claim and the manufactured deadline, disclose that the advisor is paid by the funder, one and a half percent on $45,000 and three percent on $80,000, and state the needs analysis that supports $45,000 at $54,000 of total repayment and $2,700 a week against the $80,000 option at $108,000 of total repayment and $4,153.85 a week. Record the conditions that would change the recommendation, such as a signed contract for the additional volume, and keep the note dated in the file.

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