Caution – Underwriting Procedure!

This is a cautionary note to merchants who are obtaining a small business loan from a merchant cash advance company.

Sometimes, a lender will produce contracts for a particular merchant before the file has actually been underwritten.  Often times, the merchant might be working with a broker who is working on behalf of the lender.  The reason lending companies do this is to save time paying for underwriters to work on files for merchants who are not truly interested in obtaining funding.  For this reason, the lender will produce contracts and have the merchant sign them before the file has been underwritten.  Obviously, this causes many problems down the line, as many issues may come up in the underwriting process regarding the merchant’s business or personal credit.  Additionally, after underwriting, there is a good chance that the actual numbers will change on the merchant.

Here, at businessloansmall.org, we suggest to all our merchant to inquire before dealing with a lender if they are fully underwriting the file before they produce contracts.

To read more about the difference between a direct lender and a broker click here!

To read more about obtaining a small business loan click here!