Typically,loan examiners place adversely classified loans into three categories.Loans in which the margin of protection is inadequate due to weaknesses in collateral or in the borrower's repayment abilities are categorized as:

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Substandard loans are those in which there is an inadequate margin of protection due to weaknesses in collateral or in the borrower's repayment ability. Loss loans are those loans that are considered uncollectible, and doubtful loans are those in which there is uncertainty about whether the loan will be repaid. Unproductive loans and bad loans are not commonly used terms in loan classification.

Typically,loan Examiners Place Adversely Classified Loans into Three Categories