How to write a credit memo for an investment committee (template and checklist)

Underwriter AI Team23 September 20265 min read

The credit memo, or IC memo, is where weeks of diligence become a single decision. A strong memo lets a committee approve, decline or restructure a facility in one sitting. A weak one sends the deal back for another round. This template covers the structure most investment committees expect.

What an IC memo is for

An investment committee memo summarises a credit proposal so that the committee can decide on it. It is not a data dump. It should make a clear recommendation, show the evidence for it, and state the risks honestly, including the questions that remain open.

The IC memo template, section by section

1. Executive summary

One page. The ask, the recommendation, the three reasons for it and the two biggest risks. Many committee members will read only this page, so write it last and write it carefully.

2. Borrower overview

Business model, sector, ownership (including any sponsor), management quality and competitive position.

3. Facility and structure

Facility type, amount, tenor, pricing, security, ranking and the use of proceeds.

4. Financial analysis

Historical and projected revenue, EBITDA and cash flow. Show reported and adjusted EBITDA, list the add-backs, and present leverage and coverage on both bases. Include a downside case.

5. Key risks and mitigants

Each risk paired with its mitigant, and an honest note where the mitigant is weak.

6. Covenants and monitoring

Financial covenants with headroom at close, information undertakings and early-warning triggers.

7. Diligence findings and open questions

What management said on the call, what was verified against documents, and what remains unquantified.

8. Recommendation and conditions

Approve, decline or approve with conditions, stated plainly, with conditions precedent listed.

Source every claim

The fastest way to lose a committee's trust is an unsourced number. Every figure and every management claim should point back to its source: a page in the CIM, a line in the audited accounts, or a timestamp in the diligence call. When a committee member asks “where does this come from?”, the answer should take seconds.

Common mistakes

• Burying the recommendation below pages of background.
• Presenting only adjusted EBITDA, with no reconciliation to reported numbers.
• Listing risks without mitigants, or mitigants that do not actually mitigate.
• Losing the nuance of the diligence call: the evasive answer that never makes it into the notes.
• Leaving open questions out, instead of flagging them for the committee.

Pre-submission checklist

• Executive summary fits on one page and states a clear recommendation.
• Reported and adjusted EBITDA are reconciled, with add-backs listed.
• Leverage and coverage are shown on both bases, plus a downside case.
• Every risk has a mitigant, or is honestly marked as unmitigated.
• Covenant headroom is stated at close.
• Every number is sourced.
• Open questions from the diligence call are flagged, not dropped.

Example: an executive summary that works

Recommendation: Approve a ₹120 Cr five-year term loan to Meridian Logistics (illustrative), subject to the conditions below.

Why: (1) contracted revenue covers 70% of forecast debt service; (2) leverage of 3.1x reported, 3.4x after rejecting the proposed synergy add-back; (3) experienced management with a record of deleveraging.

Key risks: customer concentration (top client 28% of revenue), mitigated by a cash sweep and a concentration covenant; fuel-cost pass-through is contractual for only 60% of volume, and is not fully mitigated.

Notice what this does. The ask and the answer come first. The numbers are shown on both bases. The risk that is not fully mitigated is stated plainly instead of being softened. Committees trust memos that are candid about their weak points.

Writing for a committee

• Lead with the answer. Recommendation first, reasoning second, background last.
• Use numbers, not adjectives. “Leverage 3.4x, headroom 25%” beats “comfortable leverage”.
• Separate fact from view. Mark what was verified, what management claimed, and what is your judgement.
• Keep appendices for detail. The main memo should be readable in ten minutes.
• Name the open questions. An unanswered question disclosed is better than one discovered later.

Credit appraisal notes at Indian banks and NBFCs

In Indian banks and NBFCs the same document is often called a credit appraisal note or credit proposal, and it usually goes to a credit committee under a delegated-authority structure. The core template above still applies. Institutions typically also expect:

• Borrower and group exposure against internal and regulatory exposure limits.
• The internal credit rating and its rationale.
• Security cover and valuation details, with the date and source of each valuation.
• Compliance checks such as KYC, end-use of funds and any related-party considerations.
• For IFSC Banking Units at GIFT City, currency and cross-border considerations for foreign-currency lending.

Always follow your own institution's credit policy and template; this guide is a structure, not a substitute for it.

How AI speeds up the credit memo

Most memo time goes into reconstructing what happened on the call. An AI credit analyst that runs during the call keeps a sourced record as it goes: each question, answer, flag and confidence level. After the call, it drafts the diligence-findings section against your IC template, so the analyst edits and judges rather than transcribes. The recommendation, and the decision, stay with the analyst and the committee.

Frequently asked questions

What is the difference between a credit memo and an IC memo?

The terms are often used interchangeably. “IC memo” emphasises that the document goes to an investment committee for a decision; a “credit memo” or “credit appraisal note” may also be used for internal credit approval.

How long should an IC memo be?

It varies by institution and deal size, but a one-page executive summary is standard. Put detail in appendices so the main memo stays readable.

What do investment committees look for first?

A clear recommendation, the key risks with mitigants, and leverage and coverage figures they can trust. Unsourced numbers are the quickest way to lose credibility.

Can AI write the IC memo?

AI can draft sourced sections such as diligence findings, but the recommendation and the credit decision should always be made by a qualified human.