Claude AI for Commercial Loan Underwriting: Credit Memos, DSCR, and Covenant Analysis

Claude for Commercial Bankers and Credit Analysts

A credit memo that would take a junior analyst half a day to draft — three years of spread financials, DSCR calculations across rate scenarios, a risk narrative, and a recommendation — Claude can produce the first version in a few minutes. That doesn't mean the loan officer stops thinking. It means they stop typing and start reviewing. The judgment call on whether the deal makes sense is still theirs. The documentation just isn't the bottleneck anymore.

ClaudeFinanceLab's Commercial Banking SKILL.md templates are the key. Without structure, Claude gives general answers. With a template that encodes actual credit underwriting logic — how to define DSCR, what to flag in a global cash flow analysis, what covenants to include for a cyclical industry — it behaves like a credit officer who's done this workflow a thousand times.

Writing Commercial Credit Memos with Claude

The credit memo is where underwriting lives or dies. A well-written memo covers the borrower, the financials, the risks, the collateral, and ends with a clear recommendation. Most banks have a template — but filling it in correctly, with the right analysis and language, is what takes time. Claude handles that process if you give it the right inputs.

Sample Prompts

• "Write a complete commercial credit memo for a $3.5M 7-year term loan to a regional HVAC services company. Revenue $9.2M, EBITDA $1.38M, net income $820K, D&A $180K. Collateral: commercial real estate (appraised $4.1M, existing mortgage $1.6M), business assets. Personal guarantee from 100% owner (net worth $3.2M). Cover: executive summary, borrower profile, financial analysis (include 3-year ratios), DSCR, risk factors, collateral, and recommendation."
• "Draft a credit memo for a $750K operating line of credit for a medical practice. 3-year average revenue $4.2M, average EBITDA $620K. Discuss key risks for medical practice lending: payer mix concentration, regulatory changes, key-person risk. Structure the memo with risk rating: Pass, Special Mention, Substandard."
• "I'm presenting to the credit committee tomorrow. Write a one-page executive summary credit memo for a $12M leveraged buyout loan to acquire a distribution business. EV/EBITDA: 5.2x. Sponsor contribution: 35% equity. Projected DSCR: 1.42x base case, 1.18x stress. Three key strengths and three key risks."

DSCR Analysis and Debt Structuring

DSCR is the number that decides whether a deal gets approved. But the calculation isn't always straightforward — what goes into "adjusted EBITDA," how to treat the owner's compensation, whether to use NOI or cash flow from operations — and then you need the sensitivity table to show what happens if rates move 50 or 100 bps. Claude runs all of that in one pass.

• "DSCR calculation: Commercial real estate property, NOI $318K. Proposed loan $3.2M, 25-year amortization, 6.875% rate. Annual debt service = $3.2M × 7.89% mortgage constant = $252K. DSCR = $318K / $252K = 1.26x. Bank minimum 1.25x — barely passes. Run a 5×5 sensitivity table: rows = NOI from $280K to $360K in $20K steps; columns = interest rate from 6.0% to 8.0% in 50bps steps. Flag all cells where DSCR falls below 1.25x."
• "Debt yield and LTV underwriting for an office building: NOI $485K, purchase price $6.8M at a 7.1% going-in cap rate. Proposed loan $4.5M. Debt Yield = $485K / $4.5M = 10.8%. LTV = $4.5M / $6.8M = 66.2%. Run through the lender underwriting box: DSCR must be ≥ 1.25x, Debt Yield ≥ 9.0%, LTV ≤ 70%. Does this loan pass? What's the maximum loan at each constraint?"
• "Global cash flow underwriting for an S-Corp owner: Business EBITDA $1.1M, owner's salary $220K (already in EBITDA). Proposed new term loan: $480K/year in debt service. Personal obligations: primary residence mortgage $54K/year, car loans $28K/year. Calculate: (1) business DSCR net of all business debt, (2) global DSCR including personal obligations, (3) federal and state tax estimate to subtract from cash flow, (4) whether global DSC meets 1.20x minimum."

Borrower Financial Spreading and Ratio Analysis

Spreading three years of borrower financials — normalizing for owner compensation, stripping out one-time items, computing the standard ratio set — is pure labor. It has to be done correctly, but there's nothing intellectually interesting about it. Claude handles the spreading and recasting accurately; you tell it what to add back and it builds the adjusted EBITDA from there.

• "Spread these 3 years of financials for a $4M business acquisition loan. I'll paste the income statement and balance sheet for FY2023, FY2024, FY2025. Produce a standardized spreading table with: revenue, gross profit, EBITDA (computed and adjusted), net income, total assets, total debt, equity. Compute: leverage (Debt/EBITDA), DSCR, current ratio, gross margin, EBITDA margin, revenue CAGR. Recast EBITDA by adding back: $85K one-time legal settlement FY2024, $45K excess owner compensation above market."
• "Annual ratio trend analysis for a 5-year credit review. Compute and present in a table: (1) profitability — gross margin, EBITDA margin, ROA, ROE; (2) leverage — Debt/EBITDA, Debt/Equity; (3) liquidity — current ratio, quick ratio, cash ratio; (4) coverage — interest coverage (EBIT/interest), DSCR. Provide a 3-sentence trend commentary for each category."

Covenant Structuring and Compliance Tracking

Covenant design is part underwriting, part negotiation — you want protection that's meaningful without being so tight it triggers a technical default after one bad quarter. And then once the loan is on the books, every reporting period means pulling the compliance certificate and checking the math. Claude helps with both: designing the package up front and checking compliance on the quarterly numbers.

• "Design a covenant package for a $6M revolving credit facility to a commercial printing company (cyclical industry, EBITDA $1.1M, existing debt $2.8M). Include: (1) DSCR covenant tested quarterly with the right definition, (2) maximum leverage, (3) minimum liquidity, (4) CapEx limit. Provide the full covenant definition language and the current company's headroom against each covenant."
• "Covenant compliance certificate: As of 9/30/26 — DSCR covenant ≥ 1.25x: computed DSCR 1.21x (BREACH). Leverage ≤ 4.0x: actual 3.6x (pass). Minimum liquidity $500K: actual $820K (pass). Draft a bank notification memo documenting the DSCR breach, analysis of whether it's a technical or material breach, the cure period, and a proposed waiver request with management commentary."

SBA Loan Analysis and Narrative

SBA lending is its own discipline — the eligibility rules, the equity injection requirements, the use of SDE vs. EBITDA for cash flow analysis — and it moves fast. Claude handles the eligibility assessment, the debt service analysis, and the credit narrative SBA requires. For 7(a) and 504 lenders doing volume, this is a meaningful time saver per file.

• "SBA 7(a) loan for a restaurant acquisition: Purchase price $1.1M. Seller's discretionary earnings (SDE) $285K (3-year average). Proposed SBA loan: $900K, 10-year term, current prime-based rate (approximately 11.25%). Annual debt service $147K. DSCR = $285K / $147K = 1.94x. Equity injection: $200K from buyer (18.2%). Assess: (1) SBA eligibility — is this a small business? (2) Is the equity injection adequate? (3) DSCR is strong but is SDE the right cash flow measure? Discuss risks: restaurant industry, working capital, key-person. Recommend."
• "SBA 504 project for owner-occupied commercial real estate: Total project cost $2.4M (building $1.9M + equipment $500K). SBA 504 structure: CDC debenture 40% ($960K at fixed rate), bank first mortgage 50% ($1.2M), borrower equity 10% ($240K). Calculate: bank DSCR using only first mortgage payments; combined DSCR on total debt service. Is the deal bankable? Write the SBA-required credit narrative."

How to Use ClaudeFinanceLab's Commercial Banking Skills

The Commercial Banking category has seven templates: credit memo writer, covenant compliance tracker, financial spreading tool, DSCR/debt yield calculator, CRE rent roll normalizer, call prep brief generator, and SBA loan narrative assistant. Pick the one that matches your immediate workflow, paste it into a Claude Project as the system prompt, and you're done. No API access needed — it works directly in Claude.ai Pro or Teams.

The fastest place to start is the Commercial Credit Memo Writer, since it covers the full underwriting workflow from financial spreading through recommendation. From there, the Covenant Compliance Tracker and DSCR Calculator are the most frequently used tools for ongoing portfolio management.