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> Commercial loan onboarding
Commercial loan onboarding
1. Pre-Onboarding Preparation
Gather necessary documentation from the borrower.
Verify borrower's identity and business information.
Conduct initial credit assessment of the borrower.
Assess compliance with regulatory requirements.
2. Initial Loan Application Review
Review the completed loan application for accuracy.
Ensure all required financial statements are included.
Check for any missing information or documentation.
Confirm the purpose of the loan aligns with lending policies.
3. Due Diligence
Conduct a background check on the borrower and key stakeholders.
Evaluate the borrower's credit history and score.
Analyze the business's financial health (balance sheet, income statement, cash flow).
Assess collateral and its valuation.
4. Risk Assessment
Identify potential risks associated with the loan.
Evaluate the industry and market conditions affecting the borrower.
Determine loan terms based on risk profile.
Review and document risk mitigation strategies.
5. Loan Structuring
Define the loan amount, interest rate, and repayment terms.
Determine any covenants or conditions to be imposed.
Prepare loan documentation and agreements.
Review loan structure with credit committee or decision-making body.
6. Approval Process
Submit the loan application and supporting documents for approval.
Schedule and conduct a loan committee meeting if necessary.
Obtain final approval from authorized personnel.
Communicate approval decision to the borrower.
7. Closing the Loan
Prepare closing documents, including promissory notes and security agreements.
Schedule a closing meeting with the borrower.
Review and execute all necessary documentation.
Collect any required fees or initial payments.
8. Post-Closing Activities
Set up loan servicing in the system.
Conduct a compliance review to ensure all regulations are met.
Establish a communication plan for ongoing borrower engagement.
Monitor loan performance and compliance with covenants.
9. Documentation and Record Keeping
Ensure all documentation is stored securely and in compliance with regulations.
Maintain records of communications with the borrower.
Document any changes or amendments to the loan agreement.
Regularly update internal databases with loan status and borrower information.
10. Continuous Monitoring
Schedule periodic reviews of borrower’s financial performance.
Monitor industry and market conditions impacting the loan.
Adjust loan terms or engagement strategy as necessary.
Prepare for renewal or refinancing processes as the loan matures.
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