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 Borrowers meet certain minimum criteria. Borrowers must:
- For loans up to $40,000 (“Express Loans”):
- Have generated at least $30,000 in revenue in any given 12-month period within the last 24 months.
- Have a credit score greater than 600.
- Have been operating for at least 2 years.
- For loans up to $500,000 (“Standard Loans”):
- Generate at least $100,000 in annual revenue and have demonstrated an ability to generate positive cash flow.
- Be Incorporated or a Partnership.
- Have been operating 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. These include but are not limited to:
- Personal/business credit information.
- Details of their operation.
- Number of employees & 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 bank and financial statements, Notice of Assessments, as well as other supplementary documentation.
Once documentation has been gathered, the Borrower is assigned an Account Manager. The Account Manager then conducts checks on the business. These checks include 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.
The credit risk assessment is performed by our credit underwriting team in conjunction with our proprietary technology that examines a large number of different data points to assign Loan Grades.
If approved, the business will be assigned a Loan Grade from A+ to E and presented with an offer for financing. The Loan Grade determines the potential for default and the corresponding interest rate. All these standard procedures mean that we currently only accept about 10% of the businesses that apply for a loan with Lending Loop.
Due Diligence and Listing
Once a preliminary offer is accepted by a Borrower, a loan officer will conduct final due diligence checks.
After due diligence is completed, the Borrower is presented with a final loan contract to review and sign. Once the agreement is signed by the borrower, they will be placed on the marketplace for funding.