This paper describes the development of a knowledge-based system (KBS) for determining whether or not, and under what conditions, a bank loan officer should grant a business loan to a company. The prototype system developed focuses on what is bank loans risks management, how to prevent risk by the analysis of the ability of paying back loans. The paper makes the structural analysis involved in the system’s decision situation, the structured situation diagram or model, dependency diagram and the document needed by the KBS prototype system thus are developed. Through testing the samples from loan business, the quality for the analysis of the ability of paying back loans can be effectively evaluated by the KBS prototype system. This paper describes the development of a knowledge-based system (KBS) for determining whether or not, and under what conditions, a bank loan officer should grant a business loan to a company. The prototype system developed focuses on what is bank loans risk management , how to prevent risk by the analysis of the ability of paying back loans. The paper makes the structural analysis involved in the system’s decision situation, the structured situation diagram or model, dependency diagram and the document needed by the KBS prototype system thus are developed Through testing the samples from loan business, the quality for the analysis of the ability of paying back loans can be effectively evaluated by the KBS prototype system.