Executive Summary
Problem Statement

Mr. Paul Mackay, a sole proprietor, has approached the Commercial Bank of Ontario in order to obtain an additional $194,000 bank loan and a $26,000 line of credit. Paul owns and operates a general merchandising retailer in Riverdale, Ontario named Lawsons’. The bank loan is needed for Mr. Mackay to reduce his trade debt that has a sheer 13.5 per cent interest penalty. The line of credit is needed for sales seasonal downfalls so that Mr. Mackay could properly manage those tough months. Jackie Patrick, a first time loans officer, has been appointed to Mr. Mackay’s request. Although anxious to finish her first loan, Ms. Patrick knows that this particular case is a difficult one.
Analysis
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Stability
With creditors financing 100% of the Lawsons’ assets and drawings, the bank will defiantly be viewing this as a red flag.
4 C’s of Credit
Conditions
Targeting low to middle class families, Lawsons’ targeted population will always be existent and has shown that though the consistent increase of sales over the last four years. This also indicates that the economy has been healthy and that there is certainly a demand for Lawsons’ goods.

Character
In the case Mr. Mackay is acknowledged for his involvement in both his company and community. Lawsons provides valuable items at low prices to help support low to middle income families. Being a sole proprietor, the money is staying in the community which in return is helping the city’s economy. Many of Lawsons’ issues derive from the lack of knowledge and experience in the business and industry. Although inexperienced, Mr. Mackay is one hundred percent committed and is often working longing hours. With some guidance, the company and Mr. Mackay can really be successful.
Capacity
Without major management changes, it is apparent through the liquidity ratios that the Lawsons’ capacity to repay at the moment is next to nothing. If new management operations are implemented, the Lawsons’ reasonable profitability should provide them with enough money to climb their way out of debt. This being said, it could be