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The first step to getting a line of credit through The Credit Junction begins with an online application. Once you fill out an initial application, you’ll move along to step two: underwriting.
The underwriting phase gives the New York-based lender a chance to learn more about you and your business before deciding whether to approve your funding request.
In a nutshell, underwriting gives lenders like The Credit Junction time to take a deeper look at the risk they are about to take on by funding your business. This “getting to know you” process typically takes about 10 to 14 days, and it involves a couple of different steps.
Let’s take a closer look at what exactly The Credit Junction does during the underwriting process so you have a better idea of what to expect.
Immediately after you fill out your initial online application, The Credit Junction will run your basic information through various databases to see if there are any judgements or liens against your business. Any information they learn gets sent along to an underwriter to review: this way, your assigned underwriter is better prepared to talk to you about your business and funding needs.
After setting up your online account and uploading the required financial documents (see our overview of the application process), you’ll be directed to set up a call with an underwriter, also called an advisor.
At this point, your online application process has moved away from technology and into the underwriter’s hands. Already armed with information about your company, the underwriter will spend about 15 to 30 minutes on the phone with you to discuss your business in more detail.
Although you’ll probably have a good sense of whether you’ll be getting a loan based on your phone call, The Credit Junction will present you with a term sheet within 24 hours if they decide to fund your business, says Michael Finkelstein, CEO and founder.
If you have any questions about their proposal, you can always call your advisor, who is prepared to walk you through the loan process and address any concerns.
If you agree to the loan’s terms and sign the deal, you should expect things to get up close and personal.
The Credit Junction will send a senior team member out to your company to meet with your management team and audit your facility, books, and other financial records. This way the lender can better understand your company’s finances. The site visit usually lasts for half a day and often occurs within a few days to two weeks of you signing off on the loan terms presented to you.
What can you expect from this site visit?
The Credit Junction team member will count your inventory, spotcheck invoices, walk the floor, and spend time with your management team and controller.
While the preliminary use of data and analytics helped them understand your financial health, The Credit Junction discovers much more about you and your company by interacting with you in person and getting a first-hand look at your business operations, says Mac Trivedi, head of financial partnerships.
The site visit also gives your management team the chance to get to know The Credit Junction and decide whether this financing partnership is a good fit for your company. It’s a two-way street, says Trivedi.
“We truly treat our investment into the capital structure of a company as a partnership. We’re helping a management team grow their company to get to the next level,” he says.
Back at its New York headquarters, The Credit Junction’s underwriter continues to investigate you and your company, now diving into your personal finances.
While The Credit Junction doesn’t use your credit history to determine loan eligibility, it does run credit reports right before funding. This helps them determine whether you have any past or present personal financial issues that could affect your business and loan. If so, they could derail your chance of getting a line of credit.
For example, it would throw up a red flag if your credit score fell between 550 and 570 chiefly because you’ve defaulted on your credit cards and landed in collections. This doesn’t reflect well on your borrowing history or character, says Trivedi. In this situation, The Credit Junction might even opt not to fund you… Even if the site visit to your business was a success.
On the other hand, The Credit Junction looks at the whole picture and will often extend financing to business owners who have extenuating reasons for low credit scores.
Here’s another example: before partnering with The Credit Junction, a business owner might’ve previously used personal credit cards to fund the growth of their company. This can result in maxed-out credit cards, leading to personal credit inquiries on his credit report. This, in turn, can lower a credit score to 550 to 570, even if every payment was made on time, says Trivedi. “That, in our mind, is not an issue with the borrower.”
After the site visit and any additional due diligence, like running a credit report to check for personal character issues, the comprehensive underwriting process is done!
Since you’ve already agreed to your loan terms and deal, The Credit Junction will issue your line of credit within a couple of days. “As soon as we get all the information, we can turn it around the loan in 48 to 72 hours,” says Finkelstein.
To better understand your line of credit offer, we’ll discuss what a financing deal involves in the final segment in our three-part series on how to get a loan through The Credit Junction. Check out the first part on the application process if you missed it, too.