Sometimes, it may seem that a business credit application takes a long time. However, this is because there are various steps that are taken to evaluate an application to ensure a fair and thorough review.

Once submitted, a credit application can pass through many hands, depending on the type and size of credit requested. A single application can be seen by lenders, underwriters, and analysts, or go through a quick, automated process.

As your credit application progresses, it can move through some (or all) of the following stages.

1. Front-end verification

The first group to handle the loan application will check the facts. This group will ensure the accuracy of all the information on the application and that the lender has all the necessary data to make a decision. They verify:

  • Income and expenses
  • Time in business
  • Personal and business credit reports
  • Ownership records

If the business has accounts with Wells Fargo, that information will be analyzed as well. Wells Fargo may look at checking and savings accounts, the date those accounts were opened, and the 12-month average balances, as well as credit card account balances and payments.

Once all the data from the application is verified, it is scored based on a number of attributes. For instance, a business that has existed for 25 years will receive a higher score for "years in business" than one that has been around for only one year; lower-risk industries may get better scores than higher-risk ones, etc. Essentially, the resulting score is a numerical representation of the applicant's business.

3. Underwriting

Scoring is more or less automatic — and may result in an automatic approval — but in some cases, the decision to actually approve a loan may shift to the underwriter. It is the underwriter's job to take a much more detailed and nuanced view of the numbers and make the ultimate decision whether the level of risk to the lender is acceptable. The underwriter can decide whether a high-risk factor is offset by other strengths.

Just as underwriters can agree or disagree with the recommendation of the scorecard, they can also decide, based on the given information, whether the credit amount should be modified. Perhaps they will approve a smaller amount, or they may believe that a factor such as the borrower's income qualifies him or her for a higher credit limit.

4. Data verifications

This is a second, more in-depth check of all the given data. This round of review investigates any discrepancies in the data such as:

  • Business names
  • Personal and business addresses
  • Social Security numbers

If they find any variances between the application and official records, they will need to verify the correct information, which can cause delays.

5. Booking and funding

Once everything is approved and verified, the applicant is notified of the decision, the loan is placed on the lender's books, and the funds are made available to the business.

As an applicant, you can facilitate the process by being thorough, detailed, and straightforward in your application.

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