In one sentence
The written analysis supporting a lending decision, covering the sponsor, the property, the underwriting, the structure, and the recommended conditions.
The longer version
The memo is the primary evidence that a credit decision was reasoned. It sets out the sources of repayment, the sensitivities run against them, the policy exceptions requested, and the conditions recommended. Everything the committee relies on should be traceable to something in the diligence file.
It also becomes a reference document for the life of the loan. When a modification is requested years later, or when an examiner asks why a structure was accepted, the memo is what gets pulled, which is an argument for writing it to be read by someone who was not in the room.
Common questions
- Who writes the credit memo?
- The deal team, typically the underwriting analyst with the relationship officer, and it is reviewed by credit before it reaches committee.
- How long should a credit memo be?
- Long enough that the reasoning is reconstructable without the author present. Length matters less than whether every conclusion traces to evidence in the file.
- Does the memo need updating before closing?
- If material facts changed between approval and funding, yes. The change and its approval belong in the file alongside the original memo.
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