Glossary
What is a credit memo in lending?
What a credit memo contains
A typical credit memo covers: borrower identity and business profile, the proposed deal structure, sources of repayment and cash flow analysis, collateral (if applicable), key risks and how they are mitigated, credit policy compliance, and the underwriter's recommendation.
For MCA and equipment deals, the memo may be abbreviated — but it should still document the key inputs (bank statement summary, existing obligations, deal terms) and the basis for the decision. A one-page memo is defensible; an undocumented verbal decision is not.
Credit memos and AI-assisted underwriting
When AI tools assist underwriting, the credit memo is where human accountability lands. The underwriter signs the memo, affirming they reviewed the AI's analysis and reached their own conclusion. Hadrian's evidence graph feeds into this process — the memo can reference specific evidence items the AI surfaced, and the audit log records when it was signed and by whom.
FAQ
Credit Memo — common questions
Is a credit memo required by law?
There is no universal legal requirement to produce a credit memo, but regulators and investors expect documentation of the credit decision process. A credit memo is the practical way to produce that documentation.
Who writes the credit memo?
Typically the underwriter or credit analyst. In AI-assisted workflows, AI may draft the memo and a human reviews, edits, and approves it — with the approval event recorded in the audit log.
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