Playbooks
Preparing your data room
Preparing your data room
Capital providers receive dozens of deal inquiries per month. The quality of your data room is one of the first signals they use to decide whether to invest time. A well-organized data room shortens diligence, builds credibility, and reduces the back-and-forth requests that slow down a process. This topic covers exactly what documents to prepare, organized by deal stage, with clear flags for what’s optional vs. what will kill your process if missing.
How capital providers use your data room
Most capital providers follow a staged diligence process. They don’t request everything upfront. They ask for screening materials first, run a quick-kill assessment, and only request deeper diligence if they want to proceed. Knowing this, you should organize your data room in tiers that match their process, not just dump everything in a folder.
What they’re actually assessing in each tier:
- Tier 1 (Screening): Is this deal worth our time? Does the originator look credible? Does the asset class and volume fit our mandate? Is there a tape we can run quickly?
- Tier 2 (Diligence): Can we actually credit-approve this? Do the numbers work? Are there any showstoppers in the operations, legal, or data?
- Tier 3 (Closing): Can we get this legally documented and funded? Are there any last-minute issues?
Timeline expectations:
| Stage | Capital Provider Activity | Typical Duration |
|---|---|---|
| Tier 1 review | Screening; decide whether to proceed | 1-2 weeks |
| Tier 2 diligence | Internal credit process, operational diligence, legal review | 4-8 weeks |
| Tier 3 documentation | Legal drafting, negotiation, closing mechanics | 4-12 weeks |
Total process: 3-6 months from first conversation for most private facilities. Plan your origination pipeline accordingly.
Tier 1: screening materials
These documents need to be ready before your first substantive conversation. If you can’t produce these within 24 hours of being asked, you will lose momentum.
Executive summary / teaser (2-4 pages)
What to include:
- Company overview: what you do, where you operate, how long you’ve been originating
- Asset class description: what loans or assets you originate, to whom, and under what guidelines
- Portfolio summary: total outstandings, average loan size, loan count, average yield, WA term, WA seasoning
- Performance summary: cumulative net loss rate by vintage, 30+/60+/90+ DPD rates, CPR
- Financing ask: amount, structure type, use of proceeds
- Management team: brief bios (2-3 sentences each) with relevant experience
Common mistakes:
- Leading with your company’s founding story instead of the deal metrics. Capital providers want numbers first.
- Using marketing language (“we are the leading provider of…”) instead of data.
- Missing key portfolio statistics. If you don’t know your own CNL, that itself is a red flag.
Format: PDF or PowerPoint. Maximum 4 pages for a teaser; 10-15 pages for a full management presentation.
Origination guidelines / underwriting criteria
Your underwriting guidelines document is one of the first things a capital provider reads after your teaser. It answers a fundamental question: do you have a credit box, and do you stick to it? This section shows you exactly what to include and what “good” looks like.
Core credit criteria by asset class
Your guidelines need hard cutoffs with specific numbers. Here’s what institutional capital providers expect to see for major asset classes:
Consumer Unsecured Loans
| Parameter | Typical Range | Red Flag Zone |
|---|---|---|
| Minimum FICO | 640-680 | Below 600 |
| Maximum DTI | 35-45% | Above 50% |
| Minimum income | $30,000-$50,000/year | No minimum stated |
| Employment tenure | 6-12 months minimum | None required |
| Loan term range | 24-60 months | Beyond 84 months |
| Loan size | $2,000-$50,000 | Above $100,000 unsecured |
Auto Loans (Prime/Near-Prime)
| Parameter | Typical Range | Red Flag Zone |
|---|---|---|
| Minimum FICO | 620-680 | Below 580 |
| Maximum LTV | 100-120% of wholesale value | Above 140% |
| Maximum PTI (payment-to-income) | 15-20% | Above 25% |
| Maximum term | 72 months | 84+ months on used vehicles |
| Maximum vehicle age (used) | 7-10 years | 12+ years |
| Maximum mileage (used) | 100,000-120,000 | 150,000+ |
Auto Loans (Subprime/Deep Subprime)
| Parameter | Typical Range | Red Flag Zone |
|---|---|---|
| Minimum FICO | 500-580 (or no FICO with trade history) | No credit requirements at all |
| Maximum LTV | 130-150% | Above 160% |
| Maximum PTI | 18-22% | Above 30% |
| Down payment | 10-20% minimum | Zero down on subprime |
| Maximum term | 60-72 months | 84+ months |
| GPS/starter interrupter | Required for high-risk | Not required on subprime |
Equipment Finance
| Parameter | Typical Range | Red Flag Zone |
|---|---|---|
| Minimum time in business | 2+ years | Under 1 year with no exceptions |
| Minimum revenue | $250,000-$500,000/year | Under $100,000 |
| Minimum personal FICO (small business) | 650-700 | Below 600 |
| Maximum advance rate | 80-100% of equipment cost | Above 120% |
| Maximum term | 60-84 months | Beyond useful life |
| Personal guarantee | Required for businesses under $5M revenue | Never required |
Residential Mortgage (Non-QM)
| Parameter | Typical Range | Red Flag Zone |
|---|---|---|
| Minimum FICO | 660-700 | Below 620 |
| Maximum LTV (purchase) | 80-90% | Above 95% |
| Maximum LTV (cash-out refi) | 70-80% | Above 85% |
| Maximum DTI | 43-50% | Above 55% |
| Documentation type | Full doc, bank statement, asset depletion | Stated income with no documentation |
| Reserves | 6-12 months PITIA | Zero reserves |
Exception policy: what to include and what’s too high
Every originator has exceptions. Capital providers expect this. What they don’t expect is an exception rate above 15-20% of originations, or exceptions without documentation.
Sample exception policy language (good):
“Credit exceptions may be granted for borrowers who fall outside one or more standard credit criteria when compensating factors are present. Compensating factors include: (1) FICO above 720 with a single guideline miss, (2) DTI above guideline but substantial liquid reserves exceeding 12 months of payments, (3) LTV above guideline but appraisal shows significant recent appreciation in the subject property’s market.
All exceptions require documentation of compensating factors and approval by the Credit Committee (for exceptions to more than one criterion) or Senior Underwriter (for single-criterion exceptions). Monthly exception reporting tracks volume, type, and performance of excepted loans.”
Exception rates and what they signal:
| Exception Rate | Signal to Capital Providers |
|---|---|
| Below 5% | Tight credit box; well-defined program |
| 5-15% | Normal; expect compensating factors documented |
| 15-25% | Concerning; suggests guidelines don’t reflect actual practice |
| Above 25% | Deal-killer; guidelines are fiction |
Illustrative pricing. See pricing disclaimer.
Exception rate above 25-30% will kill most deals. If your actual lending practice doesn’t match your written guidelines, fix the guidelines to reflect reality before starting a capital raise. Mismatched guidelines and tapes are one of the fastest ways to lose credibility.
Credit committee structure
Capital providers want to see that credit decisions involve appropriate oversight. Document your approval authority structure:
Sample approval authority matrix:
| Decision Type | Loan Size | Authority Level |
|---|---|---|
| Within guidelines, no exceptions | Up to $50,000 | Senior Underwriter |
| Within guidelines, no exceptions | $50,001-$250,000 | Credit Manager |
| Within guidelines, no exceptions | Above $250,000 | Credit Committee |
| Single exception | Any size | Credit Manager + exception memo |
| Multiple exceptions | Any size | Credit Committee |
| Policy exception (outside all guidelines) | Any size | Credit Committee + CEO approval |
Credit committee composition (good practice):
- Chief Credit Officer (chair)
- Head of Underwriting
- CFO or Controller
- Independent member (board representative or advisory board member)
Meetings: Weekly or bi-weekly with documented minutes and vote records.
If your “Credit Committee” is one person making all decisions, that’s a governance red flag. Single-person credit authority is acceptable only for very small loan sizes (under $10,000) or fully automated decisioning with model governance.
Channel breakdown and credit quality variance
Different origination channels have different credit quality. Document this:
Sample channel breakdown table:
| Channel | % of Volume | WA FICO | WA DTI | CNL (12-mo) | Notes |
|---|---|---|---|---|---|
| Direct to consumer (web) | 45% | 695 | 32% | 2.8% | Highest marketing cost |
| Dealer indirect | 35% | 672 | 38% | 4.2% | Lower acquisition cost, higher loss |
| Point of sale (merchant) | 20% | 710 | 28% | 1.9% | Lowest loss, limited scale |
Capital providers will run tape stratifications by channel. Significant performance variance between channels (more than 150bps CNL difference) raises questions about whether you should be originating from your worst-performing channel at all.
Sample loan tape
This is the most important document in Tier 1. See Your Loan Tape for full field requirements.
For screening purposes, the tape needs:
- All required core fields (loan ID, origination date, current and original balance, rate, term, status)
- Borrower credit quality indicator (FICO, internal score, or equivalent)
- Geographic field (state)
- Payment history (at minimum current DPD status; payment history is better)
- No PII — use loan IDs, not borrower names or SSNs
Anonymization is not optional. Strip all PII before sending to capital providers. Loan ID, origination date, balance, rate, term, status, state: yes. Name, SSN, address, phone, email: no. This is required under most NDAs and privacy regulations.
Minimum: 500-1,000 loans, or your full portfolio if smaller.
Static pool / vintage performance data
Static pool data shows how your historical originations have performed over time. This is the single most important credit data you provide. Capital providers use it to project future losses and calibrate advance rates.
What cohort analysis should show
Organize your data by origination cohort (quarterly or monthly) with performance metrics tracked by age. The standard format uses origination period as rows and months-on-books as columns.
Essential metrics to track:
- Cumulative Net Loss (CNL): Total losses net of recoveries, as a percentage of original balance
- Delinquency (30+ DPD, 60+ DPD, 90+ DPD): Percentage of current balance in each delinquency bucket
- Cumulative Prepayment Rate (CPR) or SMM: Voluntary prepayments as percentage of original balance
- Cumulative Default Rate (CDR): Gross defaults before recoveries (useful if recovery rates vary)
Sample cumulative loss curve with commentary
Consumer Unsecured (24-36 month term) - Cumulative Net Loss by Vintage:
| Cohort | Month 3 | Month 6 | Month 9 | Month 12 | Month 18 | Month 24 | Month 30 | Month 36 | Ultimate |
|---|---|---|---|---|---|---|---|---|---|
| Q1 2023 | 0.15% | 0.52% | 1.10% | 1.85% | 3.20% | 4.45% | 5.20% | 5.65% | 5.80% |
| Q2 2023 | 0.18% | 0.61% | 1.25% | 2.05% | 3.55% | 4.90% | 5.60% | — | — |
| Q3 2023 | 0.12% | 0.48% | 0.98% | 1.72% | 3.05% | 4.20% | — | — | — |
| Q4 2023 | 0.14% | 0.55% | 1.15% | 1.95% | 3.40% | — | — | — | — |
| Q1 2024 | 0.20% | 0.68% | 1.35% | 2.25% | — | — | — | — | — |
| Q2 2024 | 0.22% | 0.72% | 1.42% | — | — | — | — | — | — |
| Q3 2024 | 0.19% | 0.65% | — | — | — | — | — | — | — |
| Q4 2024 | 0.21% | — | — | — | — | — | — | — | — |
How to read this table:
- Each row is a vintage (loans originated in that quarter)
- Each column shows cumulative losses at that point in the loan’s life
- Losses accelerate in months 6-18, then decelerate as loans season
- Q1 2024 and Q2 2024 show higher early losses than prior vintages (concerning)
Commentary you should include with your data:
“Q1-Q2 2024 vintages show elevated early-month losses (+20-30% versus prior cohorts at the same age). This reflects two factors: (1) credit tightening implemented in Q3 2023 removed lower-FICO approvals from Q3 2023+ vintages, making the earlier comparison cohorts appear better; (2) macroeconomic softening in early 2024 increased early defaults. We project Q1 2024 ultimate CNL of 6.5-7.0%, approximately 100bps above Q1 2023. Guideline changes effective Q3 2024 (minimum FICO increased from 640 to 660) should improve subsequent vintages.”
Loss curve benchmarks by asset class
What’s “good” vs. “concerning” for lifetime CNL:
| Asset Class | Good | Average | Concerning | Deal-Killer |
|---|---|---|---|---|
| Prime consumer unsecured | < 4% | 4-6% | 6-8% | > 10% |
| Near-prime consumer unsecured | < 8% | 8-12% | 12-16% | > 20% |
| Prime auto | < 2% | 2-4% | 4-6% | > 8% |
| Subprime auto | < 10% | 10-15% | 15-20% | > 25% |
| Deep subprime auto | < 18% | 18-25% | 25-30% | > 35% |
| Equipment finance (investment grade) | < 1% | 1-2% | 2-3% | > 4% |
| Equipment finance (middle market) | < 3% | 3-5% | 5-8% | > 10% |
| Non-QM mortgage | < 2% | 2-4% | 4-6% | > 8% |
Your losses should be compared to comparable underwriting. Subprime auto at 12% CNL is normal; prime auto at 12% CNL means your “prime” program isn’t actually prime.
Prepayment data presentation
Prepayment matters because it affects yield and weighted average life. High prepayment can be good (borrowers paying off early = low credit risk) or bad (yield compression, refinancing of your best borrowers).
Sample CPR/SMM table:
| Cohort | Month 6 | Month 12 | Month 18 | Month 24 | Annualized CPR |
|---|---|---|---|---|---|
| Q1 2023 | 8.2% | 18.5% | 28.1% | 36.4% | 22% |
| Q2 2023 | 7.8% | 17.2% | 26.5% | 34.8% | 20% |
| Q3 2023 | 6.5% | 14.8% | 23.2% | — | 18% |
| Q4 2023 | 5.2% | 12.1% | — | — | 15% |
What capital providers look for:
- Consistency: Are prepayment rates stable across vintages, or highly volatile?
- Correlation with rates: Do prepayments spike when market rates drop (refinancing)?
- Correlation with credit: Are your best borrowers prepaying fastest (adverse selection)?
Prepayment benchmarks:
| Asset Class | Low CPR | Average CPR | High CPR | Notes |
|---|---|---|---|---|
| Consumer unsecured | < 15% | 15-25% | > 30% | High CPR often means good borrowers refinancing elsewhere |
| Auto | < 10% | 10-18% | > 25% | Lower prepayment typical; trade-ins counted separately |
| Equipment | < 8% | 8-15% | > 20% | Low prepay typical; equipment has limited residual |
| Non-QM mortgage | < 15% | 15-30% | > 40% | Highly rate-sensitive; refi risk |
Vintage performance red flags
Capital providers specifically look for these patterns:
| Pattern | What It Signals | Your Response |
|---|---|---|
| Newer vintages worse than older at same age | Credit is deteriorating or guidelines loosened | Explain what changed; show guideline tightening |
| One vintage dramatically worse than adjacent | Operational issue, fraud, or specific market event | Investigate and explain; was it a one-time issue? |
| Loss curves still rising at expected maturity | Charge-off policy too slow or significant tail risk | Review charge-off timing; explain if intentional |
| No recovery credit (CDR = CNL) | Not pursuing recoveries or recovery operation is broken | Document recovery process and expected recovery rates |
| Prepayment spikes in specific vintages | Best borrowers refinancing away | Assess adverse selection risk |
Financial summary
For a screening conversation, a one-page summary is sufficient:
- Revenue: origination volume by quarter for the past 2 years, interest income, fee income
- Expenses: operating costs, cost per loan originated
- Balance sheet: total assets, total liabilities, equity/net worth, current facility balances
- Liquidity: cash on hand, available credit lines
Full audited financials are Tier 2. For screening, a summary is fine — but make sure the summary is consistent with your audited financials, or you’ll have a credibility problem when they ask for the full financials in Tier 2.
Tier 2: diligence materials
These are requested once a capital provider decides to proceed past screening. Have all of these prepared or in progress before you start your process, because the request will come faster than you expect.
Full loan tape and data dictionary
Full tape: Every loan currently in or eligible for the facility. For a warehouse, this is typically your entire active portfolio.
Essential fields list with explanations
Your loan tape needs these fields at minimum. Capital providers will reject tapes missing any of these:
Loan Identification
| Field | Description | Format | Notes |
|---|---|---|---|
| loan_id | Unique identifier for each loan | String | Never reuse IDs, even for charged-off loans |
| account_number | Internal account number (if different from loan_id) | String | Map to loan_id in data dictionary |
Origination Data
| Field | Description | Format | Notes |
|---|---|---|---|
| origination_date | Date loan was funded | YYYY-MM-DD | Not application date |
| original_balance | Principal amount at origination | Decimal | Exclude fees unless capitalized |
| original_term | Loan term in months at origination | Integer | |
| interest_rate | Annual interest rate | Decimal (0.0850 = 8.50%) | Specify if APR or simple interest |
| origination_channel | Source of origination | String | Direct, dealer, broker, POS, etc. |
| origination_state | State where loan was originated/borrower located | 2-letter code | Required for licensing verification |
Current Status
| Field | Description | Format | Notes |
|---|---|---|---|
| current_balance | Outstanding principal as of tape date | Decimal | |
| current_status | Loan status | String | Current, 1-30 DPD, 31-60 DPD, 61-90 DPD, 91-120 DPD, 120+ DPD, Charged Off, Paid Off |
| days_past_due | Number of days delinquent | Integer | 0 for current loans |
| next_payment_date | Date next payment is due | YYYY-MM-DD | |
| last_payment_date | Date of most recent payment received | YYYY-MM-DD | |
| last_payment_amount | Amount of most recent payment | Decimal | |
| remaining_term | Months remaining on loan | Integer |
Credit Quality
| Field | Description | Format | Notes |
|---|---|---|---|
| fico_at_origination | FICO score at time of underwriting | Integer | Specify which bureau/model |
| fico_refreshed | Most recent FICO (if available) | Integer | Include refresh date |
| dti_at_origination | Debt-to-income ratio at underwriting | Decimal (0.35 = 35%) | Specify front-end vs. back-end |
| income_at_origination | Stated or verified annual income | Decimal | Specify verification level |
Collateral (if applicable)
| Field | Description | Format | Notes |
|---|---|---|---|
| collateral_type | Type of collateral | String | Vehicle, equipment, real estate, none |
| collateral_value_at_origination | Value at origination | Decimal | Specify valuation source |
| ltv_at_origination | Loan-to-value at origination | Decimal | |
| vehicle_year | Model year (auto) | Integer | |
| vehicle_make | Manufacturer (auto) | String | |
| vehicle_model | Model (auto) | String | |
| vehicle_mileage_at_origination | Odometer reading (auto) | Integer |
Payment History
| Field | Description | Format | Notes |
|---|---|---|---|
| payment_history_string | Month-by-month payment status | String | ”CCCCC1C2CCC” where C=current, 1=30DPD, etc. |
| max_dpd_ever | Highest DPD reached in loan life | Integer | |
| times_30_dpd | Count of times loan was 30+ DPD | Integer | |
| times_60_dpd | Count of times loan was 60+ DPD | Integer |
Modification/Forbearance
| Field | Description | Format | Notes |
|---|---|---|---|
| ever_modified | Has loan been modified | Boolean | |
| modification_date | Date of modification (if applicable) | YYYY-MM-DD | |
| modification_type | Type of modification | String | Rate reduction, term extension, principal forgiveness, deferral |
| forbearance_flag | Currently in forbearance | Boolean |
Sample data dictionary excerpt
Your data dictionary should look like this (excerpt):
FIELD: fico_at_origination
DESCRIPTION: The borrower's FICO score as of the credit pull used for underwriting.
DATA TYPE: Integer
VALID RANGE: 300-850, or NULL if no FICO available
SOURCE: Equifax credit bureau pull via [vendor name], pulled at application
KNOWN ISSUES: Loans originated before March 2022 used FICO 8; loans after March 2022 use FICO 9. Scores are not directly comparable. Approximately 2% of loans have NULL FICO where borrower has thin file.
NOTES: For borrowers with no FICO, see internal_score field for proprietary credit assessment.FIELD: current_status
DESCRIPTION: The loan's payment status as of the tape cut-off date.
DATA TYPE: String
VALID VALUES: "Current", "1-30 DPD", "31-60 DPD", "61-90 DPD", "91-120 DPD", "120+ DPD", "Charged Off", "Paid Off", "Bankruptcy", "Repossession", "Foreclosure"
SOURCE: System-generated based on payment posting
KNOWN ISSUES: Status updates run nightly; tape reflects status as of 11:59 PM on cut-off date. Payments received but not yet posted are not reflected.
NOTES: "Charged Off" status is assigned at 120 DPD per company policy. Loans in active bankruptcy are coded as "Bankruptcy" regardless of DPD status.Common tape errors and how to fix them
Capital providers and their analysts see these errors constantly:
| Error | Example | Fix |
|---|---|---|
| Inconsistent date formats | Mix of “2024-01-15”, “01/15/2024”, “15-Jan-2024” | Standardize to YYYY-MM-DD throughout |
| Balance doesn’t amortize correctly | Loan shows $10,000 original, $9,800 current after 12 payments at 10% rate on 36-month term (should be ~$7,200) | Investigate: is there a fee capitalization? Payment misapplication? |
| Negative remaining term | Remaining_term shows -3 | Fix data; loan is past maturity but still showing active |
| Status/DPD mismatch | Status = “Current” but days_past_due = 45 | Reconcile status logic with DPD calculation |
| Duplicate loan IDs | Two rows with same loan_id | Ensure loan_id is unique; investigate if data refresh issue |
| Future origination dates | Origination_date is after tape date | Data entry error; correct the date |
| FICO out of range | FICO = 1200 or FICO = 0 | Clean invalid values; use NULL for missing |
| State code errors | ”California” instead of “CA”, or “XX” | Standardize to 2-letter codes |
| Character encoding issues | Names/addresses show “’” or similar | Fix encoding; ensure UTF-8 |
| Missing required fields | Entire column is blank | Populate from source systems or document why unavailable |
Run your tape through validation before sending. Check for: duplicate IDs, invalid dates, values outside expected ranges, status/DPD consistency, balance amortization sanity checks. Fix issues before capital providers find them.
Stratification examples
Capital providers will cut your tape dozens of ways. Prepare these stratifications in advance:
FICO Band Stratification
| FICO Band | Loan Count | % of Count | Current Balance | % of Balance | WA Rate | WA Term | CNL (if seasoned) |
|---|---|---|---|---|---|---|---|
| 760+ | 1,245 | 12.5% | $18,420,000 | 14.2% | 8.5% | 42 | 1.2% |
| 720-759 | 2,890 | 28.9% | $38,150,000 | 29.4% | 9.2% | 44 | 2.1% |
| 680-719 | 3,120 | 31.2% | $39,800,000 | 30.7% | 10.5% | 46 | 3.8% |
| 640-679 | 1,980 | 19.8% | $24,600,000 | 19.0% | 12.1% | 48 | 5.9% |
| Below 640 | 765 | 7.6% | $8,730,000 | 6.7% | 14.2% | 50 | 9.2% |
| Total | 10,000 | 100% | $129,700,000 | 100% | 10.3% | 45 | 3.6% |
Illustrative pricing. See pricing disclaimer.
Geographic Stratification (Top 10 States)
| State | Loan Count | % of Count | Current Balance | % of Balance | WA FICO | CNL |
|---|---|---|---|---|---|---|
| CA | 1,850 | 18.5% | $28,200,000 | 21.7% | 702 | 3.2% |
| TX | 1,420 | 14.2% | $17,100,000 | 13.2% | 688 | 4.1% |
| FL | 1,180 | 11.8% | $14,300,000 | 11.0% | 695 | 3.8% |
| NY | 680 | 6.8% | $9,800,000 | 7.6% | 715 | 2.9% |
| IL | 520 | 5.2% | $6,100,000 | 4.7% | 691 | 4.2% |
| PA | 480 | 4.8% | $5,600,000 | 4.3% | 698 | 3.5% |
| OH | 410 | 4.1% | $4,500,000 | 3.5% | 682 | 4.8% |
| GA | 380 | 3.8% | $4,200,000 | 3.2% | 679 | 5.1% |
| NC | 350 | 3.5% | $4,000,000 | 3.1% | 693 | 3.9% |
| AZ | 320 | 3.2% | $3,800,000 | 2.9% | 686 | 4.4% |
| Other | 2,410 | 24.1% | $32,100,000 | 24.8% | 694 | 3.7% |
Concentration limits matter. Most facilities cap single-state concentration at 20-25% of the pool. If California is 35% of your portfolio, you’ll need to address this in your facility design or accept that some CA loans won’t be eligible.
Vintage Stratification
| Origination Quarter | Loan Count | % of Count | Original Balance | Current Balance | WA Seasoning (months) | 30+ DPD | 60+ DPD |
|---|---|---|---|---|---|---|---|
| Q1 2023 | 1,200 | 12.0% | $18,000,000 | $8,200,000 | 24 | 2.8% | 1.2% |
| Q2 2023 | 1,450 | 14.5% | $21,750,000 | $11,400,000 | 21 | 3.1% | 1.4% |
| Q3 2023 | 1,680 | 16.8% | $25,200,000 | $14,800,000 | 18 | 3.4% | 1.6% |
| Q4 2023 | 1,820 | 18.2% | $27,300,000 | $18,200,000 | 15 | 3.2% | 1.5% |
| Q1 2024 | 1,950 | 19.5% | $29,250,000 | $22,100,000 | 12 | 3.8% | 1.8% |
| Q2 2024 | 1,900 | 19.0% | $28,500,000 | $25,000,000 | 9 | 4.2% | 2.0% |
| Total | 10,000 | 100% | $150,000,000 | $99,700,000 | 16 | 3.4% | 1.6% |
Servicing policies and procedures
Documents to include:
- Servicing manual: policies covering every delinquency stage, modification types, forbearance criteria, charge-off policy, recovery procedures
- Collections playbook: outreach sequences, escalation paths
- Modification policy: permitted modification types (rate reduction, term extension, payment deferral), frequency limits, approval authority
- Charge-off policy: number of days to charge off by asset class (e.g., “consumer loans are charged off at 120 DPD”)
- Recoveries policy: how you pursue deficiency balances post charge-off
Collection waterfall example
Your collections process should be documented with specific timing and escalation triggers. Here’s what an institutional-quality collections waterfall looks like:
Consumer Loan Collections Timeline
| Days Past Due | Action | Channel | Responsible Party |
|---|---|---|---|
| Day 1 | Payment due date reminder (sent day before) | SMS, Email | Automated |
| Day 3 | Friendly reminder: payment past due | SMS, Email | Automated |
| Day 5 | Second reminder with late fee notice | Email, Call attempt | Automated + dialer |
| Day 7-10 | First live conversation attempt | Outbound call | Collections Rep Tier 1 |
| Day 15 | Late fee assessed; hardship assessment | Call | Collections Rep Tier 1 |
| Day 21 | Promise-to-pay obtained or escalation | Call | Collections Rep Tier 1 |
| Day 30 | Account flagged 30+ DPD; intensity increases | Call, Letter | Collections Rep Tier 2 |
| Day 31-45 | Daily call attempts; payment arrangement offered | Call | Collections Rep Tier 2 |
| Day 45 | Forbearance or modification evaluation | Call | Collections Supervisor |
| Day 60 | Account flagged 60+ DPD; legal review initiated | Call, Letter | Collections Supervisor |
| Day 60-90 | Continued contact; legal demand letter | Call, Letter, Legal notice | Collections Manager |
| Day 90 | Account flagged 90+ DPD; recovery planning | Legal notice | Collections Manager |
| Day 90-120 | Final cure attempts; repossession/legal action prep | Call, Legal | Collections Manager + Legal |
| Day 120 | Charge-off; account moved to recovery | — | Recovery Team |
Auto Loan Collections with Repossession
| Days Past Due | Action | Channel | Notes |
|---|---|---|---|
| Day 1-15 | Same as consumer (reminder sequence) | SMS, Email, Call | |
| Day 15 | GPS ping to verify vehicle location | System | If GPS installed |
| Day 30 | Skip tracing if borrower unresponsive | Database lookup | Verify address, employment, phone |
| Day 30-45 | Increased call frequency; right to cure notice | Call, Certified mail | State-specific notice requirements |
| Day 45 | Repossession authorization review | Internal | Manager approval required |
| Day 45-60 | Repossession order issued | Field agent | Condition report required |
| Day 60-75 | Repossession attempts | Field agent | 3 attempts before escalation |
| Day 75 | Deficiency balance notice preparation | Legal | |
| Day 90 | Vehicle auction | Auction house | Minimum bid requirements |
| Day 120 | Charge-off net of recovery; deficiency pursuit | Recovery team |
Early delinquency intervention: what “good” looks like
The best-performing servicers intervene early and aggressively. Capital providers look for these metrics:
Contact Rate Benchmarks
| DPD Bucket | Target Contact Rate | Red Flag |
|---|---|---|
| 1-15 DPD | 70%+ of accounts contacted | Below 50% |
| 16-30 DPD | 85%+ of accounts contacted | Below 65% |
| 31-60 DPD | 90%+ of accounts contacted | Below 75% |
Illustrative pricing. See pricing disclaimer.
Roll Rate Benchmarks (% of accounts that roll to next bucket)
| From | To | Good | Average | Concerning |
|---|---|---|---|---|
| Current | 30 DPD | < 3% | 3-5% | > 7% |
| 30 DPD | 60 DPD | < 25% | 25-40% | > 50% |
| 60 DPD | 90 DPD | < 40% | 40-55% | > 65% |
| 90 DPD | Charge-off | < 60% | 60-75% | > 85% |
High roll rates from 30 to 60 DPD signal weak early-stage collections. This is where intervention has the most impact. If more than 50% of 30 DPD accounts roll to 60 DPD, your collections process needs improvement.
Sample modification and workout policies
Types of modifications and when to use them:
| Modification Type | Typical Use Case | Limits | Approval Authority |
|---|---|---|---|
| Payment deferral | Temporary hardship (job loss, medical) | 1-3 payments; max 2x per loan life | Collections Supervisor |
| Term extension | Permanent payment reduction needed | Max 12 months extension | Collections Manager |
| Rate reduction | Sustained hardship; prevent charge-off | Max 200bps reduction | Collections Manager |
| Principal forbearance | Severe hardship; balloon at maturity | Max 10% of principal | Director + Credit Committee |
| Principal forgiveness | Settlement; borrower can pay lump sum | Negotiate to maximize recovery | Director + Credit Committee |
Sample modification policy language (good):
“Modifications are offered to borrowers demonstrating financial hardship who have been current or less than 60 days delinquent for at least 9 of the past 12 months. Borrowers must provide hardship documentation (job loss letter, medical bills, divorce decree, etc.) and complete a financial worksheet demonstrating ability to perform under modified terms.
Maximum one modification per loan in any 12-month period. Maximum two modifications over the life of the loan. Modifications require Collections Manager approval for term extensions and rate reductions; Director approval with Credit Committee notification for any principal modification.
Modified loans are tracked separately in performance reporting. Current modification rate: 3.2% of active portfolio (target: below 5%).”
Modification red flags:
| Metric | Good | Concerning | Red Flag |
|---|---|---|---|
| Modification rate (% of portfolio) | < 3% | 3-5% | > 7% |
| Re-default rate (mods that go 60+ DPD within 12 months) | < 25% | 25-40% | > 50% |
| Multiple modifications (loans modified 2+ times) | < 10% of mods | 10-20% | > 30% |
What “institutional quality” servicing looks like
Capital providers assess servicing quality across these dimensions:
Technology and Systems
| Component | Institutional Standard | Red Flag |
|---|---|---|
| Loan management system | Commercial platform (Fiserv, Black Knight, Shaw, Nortridge) | Spreadsheets or homegrown Access database |
| Payment processing | Same-day posting; multiple payment channels | Manual posting with delays |
| Dialer | Predictive/preview dialer with call recording | Manual dialing from lists |
| Document management | Indexed document repository | Paper files or unorganized shared drives |
| Reporting | Automated daily/weekly/monthly reports | Manual report compilation |
Staffing and Training
| Metric | Institutional Standard | Red Flag |
|---|---|---|
| Collector-to-account ratio | 1:400-800 (varies by asset class) | 1:1500+ |
| Supervisor-to-collector ratio | 1:8-12 | 1:20+ |
| Collector turnover | < 30% annually | > 50% annually |
| Training program | 2-4 weeks initial; ongoing compliance training | ”Learn on the job” |
| QA call monitoring | 5-10% of calls monitored monthly | No monitoring |
Compliance Infrastructure
| Component | Institutional Standard | Red Flag |
|---|---|---|
| FDCPA/TCPA training | Annual certification | No formal training |
| Call time restrictions | Automated enforcement | Manual reliance |
| State-specific compliance | Documented procedures by state | One-size-fits-all approach |
| Complaint tracking | Logged, investigated, trended | Informal handling |
| Audit trail | All actions logged with timestamps | Limited documentation |
Organizational chart and management team
What to include:
- Full org chart of the operating company and any affiliated entities
- Biographies for senior management (CEO, CFO, Chief Credit Officer, Head of Operations/Servicing)
- Ownership structure: who owns the company, what percentage, any affiliated party relationships
Flags that need proactive explanation:
- Rapid management turnover, especially in credit or servicing leadership
- Founder-only management with no institutional hires
- Related-party origination or servicing relationships
- Complex ownership structures with offshore components
Audited financial statements
Standard requirements:
- Two years of audited annual financial statements (audited by a recognized firm, not a compilation)
- Most recent management-prepared financial statements if audited statements are more than 6 months old
- For earlier-stage companies (under 2 years of operations): reviewed statements may be acceptable for some capital providers; ask upfront
SPV financial statements (if applicable):
- If you have an existing facility with a special purpose vehicle, include the SPV financial statements
- Monthly servicer reports from any existing facility
What capital providers scrutinize:
- Tangible net worth: is it positive? Does it support proposed covenant levels?
- Leverage ratio: total debt to equity; understanding how an ABF facility affects this
- Operating cash flow: is the business self-sustaining or dependent on continued equity infusion?
- Related-party transactions: are there any unusual transactions with affiliates or principals?
Compliance and licensing
Document checklist:
- State lending licenses for every state where you originate (or document the exemption basis)
- Any federal registrations (FHA approved mortgagee, SBA lender, etc.)
- CFPB registration if applicable under supervision thresholds
- Money transmitter licenses if applicable
- Any state regulatory correspondence, examination reports, or consent orders from the past 3 years
- HMDA data / CRA considerations if applicable for mortgage products
What capital providers are worried about:
- Unlicensed origination in any state, which can void loans and create liability
- Open regulatory investigations or enforcement actions
- Consent orders that restrict business practices
- “True lender” doctrine risk if you use a bank-partner model
Proactive disclosure pays. If you have compliance issues, disclose them proactively with context and your remediation plan. Capital providers discover these in their own diligence; it’s far better for you to raise them first.
Sample loan files
Capital providers want to verify that your actual loans match your guidelines and tape data.
What to provide:
- 20-50 sample loan files, randomly selected (not cherry-picked)
- Each file should include: original application, credit bureau pull, income verification documentation, loan agreement, any modification or forbearance history
- Anonymize as needed to remove PII not necessary for credit review
What they’re looking for in file review:
- Does the documentation support the tape data? (A loan showing “Prime” credit tier should have a credit bureau pull confirming that.)
- Were underwriting guidelines followed? Were exceptions documented?
- Is documentation complete? Missing income verification or unsigned loan agreements are red flags.
Insurance coverage
Documents to provide:
- Directors and officers (D&O) liability insurance: coverage summary and certificate
- Errors and omissions (E&O) insurance: coverage summary and certificate
- Cyber liability insurance (increasingly required): coverage summary
- General commercial liability: summary
- Any fidelity / crime coverage
D&O coverage signals institutional-quality governance. E&O coverage matters if there are servicing errors. Coverage gaps can be a negotiating point or a requirement before closing.
Tier 3: closing documents
These documents are needed to close and fund the facility. Most are prepared by counsel, but you need to understand what’s coming and start preparing early.
Legal opinions
- True sale opinion (issuer’s counsel)
- Non-consolidation opinion (issuer’s counsel)
- Corporate authority / enforceability opinion (issuer’s counsel)
- Tax opinion if applicable
- UCC perfection opinion or memo (issuer’s counsel or separate UCC counsel)
Opinion preparation typically takes 2-4 weeks after final docs are agreed. If there are complex legal questions (unusual structure, offshore elements, novel asset class), budget more. Cost: $10,000-$50,000 per opinion depending on complexity.
UCC filings and lien searches
- UCC-1 financing statements filed in the applicable jurisdiction(s)
- UCC lien searches on the seller/servicer and SPV (to confirm clean title chain)
- Lien searches on the collateral (to confirm no pre-existing liens)
Your counsel will run the searches and prepare the filings. Provide an accurate legal name and jurisdiction of organization for each entity in the structure. Errors in legal name or jurisdiction cause UCC filings to be ineffective.
Officer certificates and corporate approvals
- Board resolutions approving the transaction
- Officer certificates confirming organizational matters (good standing, authorized signatories, no pending material litigation not disclosed)
- Incumbency certificate (confirming who is authorized to sign)
- Good standing certificates from state of formation
These take longer than people expect. If you have independent directors (required for the SPV), their signatures may take time to obtain. Build in at least 1-2 weeks.
Account opening documentation
- Account bank agreements: new account agreements, control agreements (DACA or equivalent)
- Account setup for each required account: collection account, reserve account, distribution account, and potentially a prefunding account or spread account
- Authorized signatory documentation for each account
Account opening is a common closing delay. It can take 2-4 weeks once documents are submitted to the account bank. Start the account opening process as soon as structure is agreed, not when you’re at the closing table.
Insurance for the facility
- Proof of hazard insurance for asset classes with physical collateral (equipment, real estate, vehicles)
- Endorsement naming the SPV or trustee as additional insured / loss payee
- Flood insurance for real estate
- Title insurance for mortgage products
Final data room and tape delivery
- Final loan tape (as of agreed cut-off date) delivered in agreed format
- Reconciliation of tape to servicer records
- Eligible pool calculation demonstrating that borrowing base / advance rate supports the funding amount
- Final data dictionary
Data room organization and platform
Recommended folder structure
/01_Company Overview
Executive Summary.pdf
Management Presentation.pdf
Org Chart.pdf
Management Bios.pdf
/02_Financial Statements
Audited Financials FY2024.pdf
Audited Financials FY2025.pdf
Management Financials Q1 2026.pdf
SPV Financial Statements (if applicable)
/03_Origination and Credit
Underwriting Guidelines v2.3.pdf
Credit Policy Manual.pdf
Origination by Channel Summary.xlsx
Product Terms Sheet.pdf
/04_Loan Tape and Performance
Loan Tape [Date] - Anonymized.csv
Data Dictionary.pdf
Static Pool Analysis.xlsx
Vintage Performance - CNL.xlsx
Vintage Performance - DQ.xlsx
Vintage Performance - CPR.xlsx
Current Portfolio Stratification.pdf
/05_Servicing
Servicing Policies and Procedures.pdf
Collections Manual.pdf
Modification Policy.pdf
Monthly Servicer Reports (last 12 months)
/06_Compliance and Legal
State License Summary.pdf
Individual State Licenses (subfolder)
Regulatory Correspondence (last 3 years)
Material Litigation Summary.pdf
/07_Sample Loan Files
Loan_001 (subfolder with application, credit pull, agreements)
Loan_002
... (20-50 files)
/08_Insurance
D&O Certificate.pdf
E&O Certificate.pdf
Cyber Liability Certificate.pdf
/09_Counterparty and Deal Materials (Tier 3)
Draft Transaction Documents (add as available)
UCC Search Results
Account Opening Documentation
Officer CertificatesPlatform recommendations
| Platform | Best For | Approximate Cost |
|---|---|---|
| Datasite Diligence | Institutional standard; widely used | $1,000-$5,000/month |
| DealRoom | Smaller processes; more affordable | $500-$2,000/month |
| Intralinks | Larger processes | $2,000-$8,000/month |
| Box or SharePoint (with permissions) | Less formal processes | Lower cost but less professional appearance |
Illustrative pricing. See pricing disclaimer.
Avoid: Google Drive, Dropbox sharing links without access controls, and email attachments for anything confidential.
Set up access controls so capital providers and their counsel have view-only access by default. Enable an audit trail so you know what they’ve looked at.
Common data room red flags
| Red Flag | What It Signals | How to Address |
|---|---|---|
| Documents dated on the same day you sent the data room | Everything was just created; not part of normal operations | Build your data room over time; policies should predate the financing process |
| Inconsistencies between deck and tape (deck says 2% CNL, tape shows 3.5%) | Either the deck is wrong or you don’t know your own numbers | Reconcile before sending; include a clear note if there’s a definitional difference |
| Missing static pool data for early vintages | Early performance hidden; potentially worse than recent cohorts | Include all vintages; explain any that are incomplete |
| Servicing manual with no revision history or version numbers | Not actually used operationally | Build real policies with version history; let them age |
| No modification or forbearance data | Either no modifications (suspicious for a multi-year originator) or they’re hidden | Include modification counts and volumes in performance data |
| Legal entities with no clear purpose | Complex structure suggests tax motivation or liability avoidance | Be ready to explain every entity and its role |
| Principals with recent bankruptcies or regulatory actions | Credibility and judgment questions | Disclose proactively with context |
| 100% concentration in one origination channel | Key-man risk at the channel level | Explain the relationship and your alternatives if that partner disappears |
What to do when you don’t have something
Capital providers ask for things that early-stage originators legitimately don’t have. Here’s how to handle specific gaps:
No audited financials (too early-stage): Be upfront. Offer reviewed financials or management accounts with clear disclosure of accounting basis. Some capital providers will accept this with enhanced covenants or lower advance rates.
No static pool data (started less than 12 months ago): Include what you have with explicit labeling of how immature it is. A 6-month vintage CNL of 0.5% is still data. Offer to send monthly updates. Capital providers will haircut advance rates to compensate for data immaturity; that’s the appropriate trade-off.
No backup servicer identified: Acknowledge it in your executive summary, explain you’re in the process of engaging candidates, and provide a timeline. Don’t pretend it’s not a requirement.
Licenses pending in some states: Show the complete picture: licensed states, pending applications with expected approval dates, states you don’t originate in. Never represent that you have a license you don’t have.
Missing loan files for early originations: Some originators have incomplete documentation from their first cohorts. Disclose which cohorts have complete file documentation and which don’t. Consider file remediation for missing documents before starting the process.
The NDA
Before sharing any confidential materials, get a mutual NDA signed. Standard elements:
- Mutual confidentiality (protects you and the capital provider)
- Definition of confidential information (should include all data room materials, not just “trade secrets”)
- Permitted use limited to evaluating the proposed transaction
- Return or destruction of materials if no deal closes
- Carve-outs for publicly available information and information the recipient independently developed
- Term: 2-3 years minimum; perpetual for trade secrets
- No-poach provision (prevents the capital provider from hiring your employees after reviewing your data room)
Do not send loan tapes, financial statements, or servicing data before an NDA is signed, even to someone you know personally. You have no legal recourse if they use it without one.
Related topics
- The Originator’s Readiness Assessment — pre-requisites before building your data room
- Your Loan Tape — detailed field requirements for the tape included in Tier 1 and 2
- What Capital Providers Care About — what they’re actually looking for in diligence
- Navigating the Deal Process — process flow that the data room stages map to