New eGuide — Ask the Underwriter:10 Words of Advice from the People

Making Loan Decisions

Applying for a small business loan can be daunting.

What are yourchances of getting

approved?

How long does it taketo complete anapplication?

How long should youexpect before youhear the result?

It often feels like you’re in thedark, even if you’ve done itbefore. How do you know whatworked and what didn’t?

Fundera is here to illuminate the entireprocess of getting small business loans.

We sat down with twomasters of the field and asked them10 questions to help you, the borrower, better understand

how to successfully apply for a loan.

Steve FreshourDirector of Creditat Dealstruck

Chris CapecelatroSenior Underwriting Manager

at Funding Circle

What makes your underwritingprocess unique?

Dealstruck take only 2-3 daysto either offer a term sheetor suggest another funding partner.

Funding Circle is a marketplace, nota balance sheet lender.By marketplace, he means that theymatch creditworthy smallbusinesses who need capital withinvestors looking for yield.

1.

What are the documents you ask for thatshorter-term lenders may not ask for?And why?

As medium-term lenders, both Dealstruck and Funding Circleneedmore documentation than short-term lenders. Including:

Financial statements

Tax returns

A/R aging report(for B2B companies)

2.

I.

II.

III.

Howmuch of the underwriting process ishuman-driven, and howmuch is automated?

Though automated systemsare highly interwoven intothe underwriting process,the decisions are still madeby people.

3.

How is a borrower’s personal creditscore used?

The underwriter wants to know if you’re likely to pay backyour loan, so your personal credit score will be looked at.

You’ll probably need to have a FICO of 600 or higher.

4.

$

Borrowers try to tell the underwriters what theythink they want to hear and sometimes thatconfuses things and leads to problems at closing.If people were always 100% transparent abouttheir loan requests it would make things a loteasier.

Freshour

What do you find are the biggestchallenges of small business underwriting?5.

What are the most important factorsyou look at when underwriting loans?

While we believe credit historyis an important gauge of financialand operational stability, so tooare alternative metrics like real-time cash flow and an owner’spassion about the marketopportunity.

Capecelatro

6.

Are there any smaller factors youlook at that borrowers might besurprised to learn about?

The stated use of proceeds is an extremelyimportant factor. It tells the underwriter so muchabout the borrower’s plans for the future of thebusiness.

Positive customer reviewson social mediademonstrate yourbusiness’s potential.

Freshour

Capecelatro

7.

How long does the underwritingprocess take?

About 10 days for Funding Circle, and 5 days for Dealstruck,if everything goes well.

How complete yoursubmitted documentation is.

How quickly you can beavailable for a credit call.

The speediness of the process depends on two things:

8.

What is one piece of advice you wish youcould share with borrowers before theystart the process?

Get your books in order.We spend a lot of timewith them.

Please feel comfortable being open andforthcoming with us on your credit call! Weunderstand that no one’s record is perfect.

Freshour

Capecelatro

9.

When is financing not the rightanswer for a small business owner?

Financing is for executing on opportunities when you'realready growing. It's not life support for a failing business.If you're losing money, think about changes you canmake

internally before borrowing.

10.

New eGuide — Ask the Underwriter: 10 Words of Advice from the People Making Loan Decisions

Want the full answers and extra commentary on all 10 questions? Click below for our free 14-page eGuide.

Free eGuide Download