Lending Loop’s underwriting and due diligence process
There are several steps that Lending Loop takes when underwriting loans. Before the process begins we require that Businesses (Borrowers) meet certain minimum criteria. Businesses must:
Generate at least $100,000 in annual revenue and have demonstrated an ability to generate positive cash flow
Be Incorporated or a Partnership
Be in operation for at least 1 year
Have a guarantor with a credit score greater than 600
Once we have determined that the potential Borrower has met the above criteria we gather additional information about the Borrower, including but not limited to, personal/business credit information, details of their operation, number of employees, and the use of funds. Once Lending Loop determines that the Borrower meets the basic criteria the Borrower is requested to provide additional documentation such as the previous two years of financial statements as well as year to date financial statements.
Once documentation has been gathered, the Borrower is assigned an Account Manager, who conducts checks on the business including searching for information about the owner(s), location, the online presence of the business, and personal/business credit reports of all relevant parties. Once these checks have been completed, the Borrower’s file is sent to our credit team.
Credit and Underwriting
Once the credit team receives the file they begin the credit risk assessment. The credit risk assessment is performed by our credit underwriting team in conjunction with our proprietary technology that looks at over one hundred different data points to assign risk ratings. This data comes from a variety of different sources including:
Financial statements (debt service coverage ratio, debt-to-tangible net worth, working capital ratio and more)
Credit score (payment and delinquency history, delinquency patterns, years in business, years borrowing, business’ size, industry segmentation and more)
Government agencies, banking data and much more
Once approved, the business will be assigned a risk rating on an A+ to E scale. This rating determines the risk and the corresponding potential return as a Lender. All these standards mean that we currently only accept about 10% of the businesses that apply for a loan with Lending Loop.
Final Steps: Due Diligence and Listing
The Borrower is then presented with a preliminary offer after the credit team has completed their risk assessment. Once this preliminary offer is accepted by the Borrower, Lending Loop conducts final due diligence steps including reviewing the business’s CRA Notice of Assessment, PPSA searches, Corporate Status Reports, and any follow up questions that the credit team may have.
After due diligence is complete, the Borrower is presented with a final contract agreement and once signed, is placed on the marketplace for funding.