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Updated: March 27th, 2020
With banks and many other traditional lenders, submitting a business loan application can sometimes feel like sending a message in a bottle — you have no idea when anyone will ever see it, or how they’ll respond at all. All you can do is wait for an answer, which can take weeks or even months.
Underwriting is the process by which we evaluate the creditworthiness of a business to see if it qualifies for one of our loans.
At Funding Circle, we take the mystery and the suspense out of the equation: we personally keep you in the loop every step of the way and are committed to giving you an answer in as little as 24 hours.
Most small businesses who are funded on our marketplace even have the opportunity to talk to the person who will make their credit decision: their underwriter.
Curious as to how your underwriter so accurately evaluates your loan application in such a short time frame?
We’ve pulled together bite-sized answers to some of the most common questions about our underwriting process:
Simply put, underwriting is the process by which we evaluate the creditworthiness of a business to see if it qualifies for one of our loans.
For small businesses like yours, for example, we’re making sure the monthly loan payments won’t be too large and that you can pay back your loan over a reasonable period of time.
For investors on our marketplace, we need to ensure we are pricing the risk appropriately so they will continue to put their money to work for small businesses like yours.
We look for businesses that have a stable operating history, businesses that are profitable and businesses that can afford a loan.
We also look at the business owner to make sure they are steering their business in the right direction to grow and prosper.
If the application includes additional guarantors — trusted individuals with a stake in the business who co-sign the loan — we’ll also look at their personal credit history.
We usually ask for about five sets of documents with each application — and we look closely at everything you submit.
When we underwrite, we look through your recent tax returns and your business’ bank statements, along with your personal credit report.
We use these to measure the ability of the business to repay a loan and analyze the personal decisions the business owner and guarantor have made in the past that will set their business up for continued success.
It may not seem super hi-tech, but a simple phone call is still one of the best ways to get a general picture of a business and learn exactly how it operates.
We’re funding businesses across hundreds of industries — everything from wine merchants and restaurants to bike shops and veterinary clinics — and we love having the opportunity to speak one-on-one with the brilliant minds behind each one.
During a credit call, you’re underwriter may ask questions about why you started your business, the opportunities and challenges you’re facing, and how the loan will help your business grow.
They are looking for answers to specific questions, but most importantly this is an opportunity for you to show how passionate you are about the market opportunity.
At Funding Circle, we’re passionate about small businesses and love watching our borrowers grow over time. It’s important for us to learn as much as we can about your business in order to give it a fair evaluation.
We’re excited to read your application and see what makes you get out of bed every day.
Chris Capecelatro is Funding Circle's U.S. director of underwriting. Previously, he managed credit risk for a global casualty insurer in addition to working in commercial lending for a local bank.