SME Lending

Overview

This example illustrates timveroOS configuration for small and medium enterprise (SME) lending, supporting business loans from $10,000 to $500,000 with various structures including term loans, lines of credit, and equipment financing. The configuration includes automated financial analysis workflows and manual review processes.

Business Scenario

Target Market

Small businesses with 2+ years operating history
Annual revenues: $100,000 - $10 million
Various industries excluding restricted sectors
Both asset-backed and cash flow-based lending

Product Parameters

Loan amounts: $10,000 - $500,000
Terms: 12-84 months (term loans), 12-month revolving (credit lines)
Interest rates: Prime + 2% to Prime + 8%
Collateral: Required for loans above $100,000

Risk Considerations

Complex financial analysis requirements
Industry-specific risk factors
Personal guarantees from principals
Business and personal credit evaluation
Cash flow projections and seasonality

Operational Requirements

Configured SLA timelines
Financial document collection requirements
Covenant monitoring configuration
Manual review processes

Configuration Components

Credit Product Structure

Base Products Configuration:

Product 1: Business Term Loan

Product Code: BTL-001
Purpose: Equipment, expansion, working capital
Amortization: Monthly principal + interest
Prepayment: Allowed with 3% fee in year 1

Product 2: Business Line of Credit

Product Code: BLC-001
Purpose: Working capital, seasonal needs
Structure: Revolving, interest-only minimum
Annual Review: Required

Product 3: Equipment Finance

Product Code: EQF-001
Purpose: Specific equipment purchase
Structure: Secured by equipment
LTV Maximum: 80% of equipment value

Additive Structure by Business Size:

Small Business Tier (Revenue < $1M)

Loan Range: $10,000 - $100,000
Simplified Documentation: 3 months bank statements
Personal Guarantee: Required from >20% owners
Decision: Automated for strong profiles

Medium Business Tier (Revenue $1M - $10M)

Loan Range: $50,000 - $500,000
Full Documentation: 2 years financial statements
Collateral: Required above $100,000
Decision: Manual underwriting required

Workflow Design

Comprehensive Business Assessment Workflow:

Business Verification

Load Data Sources:
- Business credit (Experian Business)
- Secretary of State filing check
- Industry classification lookup
- Bank account verification

Owner Assessment

For each owner > 20%:
- Personal credit check
- Background verification
- Asset verification

Financial Analysis

Expression Calculations:
- debtServiceCoverage = (netIncome + interest + depreciation) / totalDebtService
- quickRatio = (currentAssets - inventory) / currentLiabilities
- leverageRatio = totalLiabilities / tangibleNetWorth
- workingCapital = currentAssets - currentLiabilities

Industry Risk Scoring

Switch on Industry Code:
- Manufacturing: baseScore * 1.0
- Retail: baseScore * 0.9
- Restaurant: baseScore * 0.8
- Professional Services: baseScore * 1.1

Automated Flags

Alert Conditions:
- DSCR < 1.15: "Insufficient cash flow"
- Quick Ratio < 0.8: "Liquidity concerns"
- Business Age < 2 years: "Limited operating history"

Warning Conditions:
- Seasonal revenue > 40% variance: "Review seasonality"
- Industry declining: "Market risk assessment needed"
- Multiple locations: "Geographic concentration review"

Profile Building

Business Profile Attributes:
- businessCreditScore
- ownerCreditScore (minimum of all owners)
- cashFlowRating
- collateralCoverage
- industryRiskFactor
- relationshipScore

Complex Offer Script

function calculateBusinessOffer() {
    const dscr = profile.get("debtServiceCoverage");
    const bizScore = profile.get("businessCreditScore");
    const revenue = profile.get("annualRevenue");
    const industry = profile.get("industryRiskFactor");
    
    // Base qualification
    if (dscr < 1.15 || bizScore < 600) {
        return null; // No automated offer
    }
    
    // Calculate base amount
    let maxAmount = Math.min(
        revenue * 0.1, // 10% of annual revenue
        calculateCashFlowCapacity(dscr),
        500000 // Product maximum
    );
    
    // Industry adjustment
    maxAmount = maxAmount * industry;
    
    // Collateral requirements
    const requiresCollateral = maxAmount > 100000;
    
    // Rate determination
    const baseRate = getPrimeRate();
    const riskSpread = calculateRiskSpread(bizScore, dscr);
    
    return {
        minAmount: 10000,
        maxAmount: Math.floor(maxAmount / 5000) * 5000, // Round to nearest 5k
        minTerm: 12,
        maxTerm: determineMaxTerm(maxAmount),
        rate: baseRate + riskSpread,
        requiresCollateral: requiresCollateral,
        requiresPersonalGuarantee: true,
        financialCovenants: generateCovenants(dscr, industry)
    };
}

function generateCovenants(dscr, industry) {
    return [
        {
            type: "MINIMUM_DSCR",
            value: Math.max(1.15, dscr * 0.9),
            frequency: "QUARTERLY"
        },
        {
            type: "FINANCIAL_REPORTING", 
            requirement: "Quarterly internal statements",
            frequency: "QUARTERLY"
        }
    ];
}

Integration Configuration

Business Data Sources:

Experian Business

Purpose: Business credit reports
Data Points: Payment history, credit utilization, public records
Mapping Focus: Business credit score, trade payment trends

Secretary of State API

Purpose: Business verification
Data Points: Registration status, ownership, filing history
Mapping Focus: Active status, years in business

Banking APIs (Multiple)

Purpose: Cash flow analysis
Data Points: 12-24 months transaction history
Mapping Focus: Revenue trends, average balances

Industry Databases

Purpose: Industry classification data
Data Points: Industry codes, classifications
Mapping Focus: Industry risk factors

Document Management

Required Documents Matrix:

Loan Amount

Documents Required

< $50,000

3 months bank statements, business tax return (1 year)

$50,000 - $100,000

6 months bank statements, 2 years tax returns, YTD financials

> $100,000

Full package: 2 years financial statements, tax returns, AR/AP aging, business plan

Document Templates:

Business loan agreement
Personal guarantee forms
Security agreements
UCC filing documents
Financial covenant certificates

Manual Review Configuration

Underwriting Queues:

Level 1 Review (Loans < $100,000)

Assigned To: Business Loan Officers
Review Focus: Document verification, reasonability checks
SLA: 24 hours

Level 2 Review (Loans $100,000 - $250,000)

Assigned To: Senior Underwriters
Review Focus: Financial analysis, risk assessment
SLA: 48 hours

Level 3 Review (Loans > $250,000)

Assigned To: Credit Committee
Review Focus: Comprehensive risk evaluation
SLA: 72 hours

Review Forms Configuration:

Financial Analysis Form:
- Revenue trend assessment [dropdown]
- Cash flow adequacy [scale 1-5]
- Management capability [text]
- Industry outlook [dropdown]
- Collateral valuation [currency]
- Recommendation [approve/decline/modify]
- Conditions [multi-line text]

Implementation Steps

Step 1: Business Structure Setup

Create business lending departments
Define specialized roles (Business Analyst, Credit Officer)
Configure industry classification catalog
Set up covenant type definitions

Step 2: Product Development

Create three base products (term, LOC, equipment)
Define product-specific parameters
Configure amortization schedules
Set up revolving credit logic

Step 3: Complex Integration Setup

Configure all business data sources
Create comprehensive mappings
Set up cash flow analysis algorithms
Test industry database connections

Step 4: Advanced Workflow Creation

Design multi-path workflow for business types
Implement owner loop processing
Configure financial ratio calculations
Set up industry-specific routing

Step 5: Sophisticated Pricing

Develop risk-based pricing matrices
Create covenant generation logic
Implement collateral requirement rules
Test various business scenarios

Step 6: Document Configuration

Create document requirement matrix
Build complex merge templates
Set up covenant monitoring forms
Configure UCC filing integration

Step 7: Manual Review Setup

Define review level criteria
Create specialized review forms
Set up approval hierarchies
Configure committee voting

Step 8: End-to-End Testing

Test various business types
Validate financial calculations
Verify document generation
Test covenant establishment

Technical Considerations

Performance Requirements

Handle complex financial calculations
Support multiple owner processing
Manage large document sets
Provide real-time collaboration

Data Architecture

Separate business and personal data
Maintain relationship hierarchies
Track multiple facilities per business
Store historical financials

Integration Complexity

Synchronize multiple data sources
Handle batch financial uploads
Manage document imaging systems
Connect to accounting platforms

Customization Needs

SDK development may enhance:

Industry-specific scoring models
Advanced financial spreading
Custom covenant monitoring
Portfolio analytics dashboards

Note: SDK customization requires development resources. Standard configuration handles core SME lending requirements.

Advanced Features

Relationship Pricing

Multiple facilities per business
Cross-default provisions
Global exposure limits
Bundled product offerings

Financial Monitoring

Automated covenant testing
Financial statement ingestion
Trend analysis alerts
Portfolio concentration reports

Industry Specialization

Vertical-specific workflows
Specialized document requirements
Industry benchmark comparisons
Seasonal adjustment models

Success Metrics

System Tracking Capabilities

Application processing metrics
Document collection status
Review cycle tracking
Covenant monitoring alerts
Portfolio distribution reports
Industry concentration data
Geographic data fields

Consumer Lending: Simpler individual assessment
Secured Lending: Asset-specific evaluation
Multi-Participant: Complex guarantee structures
Implementation: Phased rollout approach

Next Steps

Define industry focus areas
Establish risk appetite parameters
Design relationship strategies
Plan integration priorities

For additional support, consult your implementation team or system documentation.

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Last updated 4 days ago

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