Glossary
What is underwriting in lending?
What underwriting involves
Underwriting assembles and evaluates the evidence for a credit decision: identity and business verification, financial statement or bank statement review, assessment of repayment capacity, review of existing obligations, collateral evaluation (where applicable), and application of the lender's credit criteria to reach an approve, decline, or counteroffer determination.
For small non-bank lenders, underwriting is often the most manual and time-intensive part of the deal lifecycle. Streamlining it — through structured workflows, document automation, and AI-assisted analysis — is one of the highest-leverage operational improvements available.
Underwriting documentation and defensibility
A defensible underwriting record links the decision to the evidence reviewed. Examiners, capital partners, and courts expect to see not just the outcome but the inputs: what documents were collected, what data was analyzed, what criteria were applied, and who made the final call. When AI tools assist, the AI's output and the reviewer's action on it should both be captured — with timestamps and reviewer attribution.
FAQ
Underwriting — common questions
How is MCA underwriting different from traditional loan underwriting?
MCA underwriting is faster, more cash-flow-centric, and relies heavily on bank statement analysis rather than tax returns or formal financial statements. The absence of traditional credit bureau data makes bank deposit patterns, NSF history, and stacking checks the primary risk signals.
Who is responsible for the underwriting decision?
The lender is always responsible — regardless of how much AI or automation assists. A human reviewer must be identifiable as accountable for each credit decision, and the record must show their review and sign-off.
The institution around the intelligence
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