The Loan Process: What Happens after the Approval?

Congratulations! You are approved for a business loan. You are leading a healthy business and demonstrated an ability to use funding to the benefit of your business. Now what happens?

An approval for funding may be contingent upon the verification of important pieces of information. These pieces of information are often referred to as “stips” (stipulations) that will help move a approval to a funding by the underwriting team. Why might you be asked to provide “stips”? Stips help confirm ownership, reduce fraud, validate business performance, and prevent the “stacking” of loans. Adding these simple steps before funds are deposited into your bank account ultimately lower the borrowing cost to you by reducing the risk to the lender. 

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The stips that are may be required depend on the use of funds, amount requested, time in business, and other similar factors. Typically there are only one or two stips requested, if any at all. The most common stip requests following an approval include:

  • Proof of Ownership- Items that can serve to prove ownership include a business tax return, articles of organization, an EIN designation letter, or a business license.
  • Identify Verification- A voided check, driver's license, or utility bill are the most common forms of identity verification.
  • Bank Verification- This most frequently takes the form of a web screenshare or the use of a third-party bank verification service. It may also take the form of a simple phone call with your current bank.
  • Site Inspection- A quick visit to the place of business to confirm the location and conduct an exterior review is a simple way to confirm business operations.
  • Additional Banks Statements- Insight into a longer period performance beyond the standard latest 90 days may help increase the funding amount. Month-to-date bank statements help confirm no recent loans have not been taken and that a business is not distressed.
  • Co-owner Signature- If the applicant has less than 50% ownership, the majority owner will be required to sign funding contracts.
  • Payoff Letters- If there is evidence of a recent loan or cash advance, a payoff letter showing a zero balance due.

Once the required stips are provided and approved by the underwriting team, funding contracts will be created and a final funding call will be set up. The funding call will consist of a confirmation of the funding and payback amounts, followed by an electronic signature. Funds will then be deposited into your bank account and available for use in as little as one day but may vary depending on your banking institution.

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