Table of contents

4 Ways you can use RootFi's Unified API for Credit Underwriting

Rhea Nair
Product Marketing Manager
4 Ways you can use RootFi's Unified API for Credit Underwriting

Table of contents

In today's fast-paced world, credit underwriting is one of the most critical steps for business loan providers. This intricate task involves assessing creditworthiness and risk before sanctioning loans to businesses and demands both speed and accuracy for success.

RootFi's Unified API emerges as a transformative tool, offering an efficient and comprehensive solution for accessing business financial data via API integrations to accounting systems. Let's explore how accounting integrations can transform the credit underwriting process.

What is the Credit Underwriting Process?

Credit underwriting is the backbone of the loan provision process. It involves evaluating a borrower's financial health to determine the risk involved in lending based on information provided by the applicant. Accurate and comprehensive information can clarify a business's financial stability and future viability, significantly influencing lending decisions.

For business loans, risk assessment is multifaceted. As a loan provider, you must scrutinize various financial statements, credit history, cash flow, and collateral. The process often involves multiple points of contact for further documents and data from the applicant.

  1. Loan Application: The business loan applicant provides the required documents via file upload or email. This step can be cumbersome and create significant friction.
  2. Loan Processing: The lender evaluates the application. Often, this step requires the lender to request more documents from the applicant, causing more friction.
  3. Loan Approval: The lender rejects or approves the application and provides the terms for approval
  4. Loan Establishment and Disbursement: The lender prepares a contract for the loan. The applicant signs the contract, after which the allocated funds are disbursed.

Challenges in the Credit Underwriting Process

The credit underwriting process is riddled with challenges:

1. Risk of Defaults

According to industry reports, the default rate for business loans can fluctuate, impacted by economic conditions and market trends. This variability makes risk assessment a high-stakes task.

2. Time-Consuming Evaluations:

Traditional underwriting processes are often lengthy, sometimes taking weeks or months. This delay can be detrimental in a fast-moving business environment.

3. Under-funded Ecosystem:

Small and medium-sized businesses (SMBs) frequently struggle to secure loans due to stringent and complicated document requirements from lenders.

4. Data Inaccuracy:

Inaccurate or incomplete data can lead to poor lending decisions in unwarranted rejections or risky approvals.

A pivotal source for much of this crucial data lives in each applicant’s accounting system, but access to this data remains challenging. The traditional process outlined involves each business applicant uploading PDF documents to your website or sharing them via email, significantly slowing down the assessment timelines. If applicants provide incomplete information, the back-and-forth for required documents hampers the timeline even more.

Opting to assess risk based on only transaction or bank data leads to increased risk due to incomplete information. The traditional process causes a forced dilemma between slower processing times and incomplete data. RootFi's Unified API addresses these challenges head-on, offering a more streamlined, accurate, and efficient underwriting process.

Benefits of Using Accounting Integrations in Credit Underwriting via RootFi’s Unified API

For Lenders Providing Business Loans

  • Enhanced Risk Assessment: Access to real-time, comprehensive financial data allows for a more accurate risk assessment.
  • Increased Efficiency in Processing Times: Access to real-time accounting data will significantly speed up the underwriting process, enabling faster decision-making in underwriting.
  • Standardized Data from Every Platform: Leveraging accounting integrations via a Unified API provider like RootFi allows lenders to access data in a standardized format, reducing the mental load of analyzing data in different formats preferred by various accounting platforms.
  • Dynamically Change Credit Rates and Limits: With access to real-time accounting data, you can dynamically change credit rates and increase credit limits based on your business customers’ performance.
  • Instant Market Expansion: Simplified processes open avenues to cater to a broader spectrum of customers. RootFi offers integrations to 15+ accounting platforms, making each platform’s business customer a potential customer to you.

For Businesses Receiving Loans

  • Reduced Application Friction: Providing a way for loan applicants to authorize data access into their accounting systems reduces the friction in preparing financial documents required in traditional loan processes.
  • Quicker Loan Approvals: Streamlined data access means less back-and-forth and stress in collecting and sharing the right data and documents, leading to faster loan processing.
  • Better Loan Terms: Accurate data can lead to more favorable loan terms based on a true understanding of your customers’ business's health, which can be dynamically changed based on business performance.
  • Improved Operations: Receiving better loan terms and fast approval allows your business customers to improve their operations, revenue and profitability.

4 Ways You Can Use RootFi’s Unified API for Credit Underwriting Solutions

1. Term Loans

A term loan is a lump sum of money repaid over a fixed period with regular installments of principal and interest. Term loans are ideal for major purchases like equipment or expanding operations.

  • Typical Documents Required: Business plan, financial projections, tax returns, personal guarantees, collateral documentation.
  • Key Data Points Required: Projected cash flow, debt-to-equity ratio, profitability, credit score, and collateral value.

The traditional process for underwriting a term loan involves credit checks, financial statement analysis, and cumbersome paperwork. The process can be time-consuming and lacks real-time insights into business performance. Accounting integrations provide real-time access to updated financial data, enabling quicker and more accurate assessments for term loans.

2. Working Capital Loans

Working Capital Loans are a form of short-term financing to bridge the gap between current assets and liabilities to support day-to-day operations.

  • Typical Documents Required: Accounts receivable and payable aging reports, bank statements, inventory reports, and business tax returns.
  • Key Data Points Required: Accounts receivable aging, inventory turnover, current ratio, operating expenses, and historical sales trends.

The conventional process relies heavily on historical financial performance and projections, which can be time-consuming to prepare, provide, and analyze. This loss of time in reviewing documents also creates a data accuracy gap between the data provided in the application and real-time data. Accounting integrations provide up-to-date financial data, ensuring lenders have a comprehensive view of every applicant’s current financial health.

3. Business Credit Cards & Expense Management

As an expense management provider, you may offer expense cards as a product. Business credit cards offer streamlined expense management tools for employees.

  • Typical Documents Required: Financial statements and business tax returns, applicant and key employee credit history, spending limits, and authorization controls
  • Key Data Points Required: Historical spending patterns and budget adherence, risk profile relative to the industry, and individual cardholder creditworthiness.

Traditional assessments are often based on credit scores and historical financial data, which may not accurately reflect a business's present financial state and trajectory. RootFi's solution facilitates a more nuanced evaluation using current accounting data, allowing you to enhance expense card offerings dynamically.

4. Invoice Financing

Invoice financing, also known as accounts receivable financing, involves borrowing against outstanding invoices due from customers, helping a business improve cash flow, fulfilling their accounts payable, and reinvesting in their growth.

  • Typical Documents: Copies of invoices, customer credit reports, bank statements, business tax returns, historical accounts receivables aging
  • Key Data Points: Average invoice value and aging, customer payment history, creditworthiness of buyers, business financial health.

The conventional processes for invoice financing requests can be time-intensive due to the verification required to prevent fraud. Accounting integrations can streamline the process by offering quick access to accurate financial data directly from the applicant’s accounting system, reducing the time and risk involved in invoice financing.

How to start transforming your credit underwriting process with RootFi’s Unified API

Getting started with RootFi is a simple process and only requires a simple front-end interface lenders can use to view your applicants’ accounting data. Our team is always happy to help guide you if you’re unfamiliar with building out a front-end interface:

  1. Sign up for a free account and get familiar with our services.
  2. Use RootFi’s Data Coverage Tool to understand what data you can read into your interface from each accounting system.
  3. Use RootFi’s Documentation to connect your interface to every accounting system via RootFi’s API calls.
  4. Use RootFi’s secure Connect SDK to add a drop-in component in your interface so applicants can seamlessly allow data access from their accounting platform.
  5. Go live with your connected solution and watch the credit underwriting process transform!

Leverage RootFi’s Unified Accounting API to Transform your Business Loan Approval Processes

RootFi's Unified API revolutionizes the credit underwriting process for business loans. Integrating comprehensive, real-time accounting data addresses the traditional pain points of risk assessment, efficiency, and accuracy. For loan providers and businesses alike, RootFi's technology paves the way for more informed, quicker, and safer financial decisions.

Harness the power of accounting integrations to streamline your credit underwriting processes and gain a competitive edge in the market. Start leveraging accounting integrations by signing up for free or booking a personalized demo.

Embrace the power of RootFi's Unified API to transform your credit underwriting process and step into a world of efficient, data-driven financial solutions.

In today's fast-paced world, credit underwriting is one of the most critical steps for business loan providers. This intricate task involves assessing creditworthiness and risk before sanctioning loans to businesses and demands both speed and accuracy for success.

RootFi's Unified API emerges as a transformative tool, offering an efficient and comprehensive solution for accessing business financial data via API integrations to accounting systems. Let's explore how accounting integrations can transform the credit underwriting process.

What is the Credit Underwriting Process?

Credit underwriting is the backbone of the loan provision process. It involves evaluating a borrower's financial health to determine the risk involved in lending based on information provided by the applicant. Accurate and comprehensive information can clarify a business's financial stability and future viability, significantly influencing lending decisions.

For business loans, risk assessment is multifaceted. As a loan provider, you must scrutinize various financial statements, credit history, cash flow, and collateral. The process often involves multiple points of contact for further documents and data from the applicant.

  1. Loan Application: The business loan applicant provides the required documents via file upload or email. This step can be cumbersome and create significant friction.
  2. Loan Processing: The lender evaluates the application. Often, this step requires the lender to request more documents from the applicant, causing more friction.
  3. Loan Approval: The lender rejects or approves the application and provides the terms for approval
  4. Loan Establishment and Disbursement: The lender prepares a contract for the loan. The applicant signs the contract, after which the allocated funds are disbursed.

Challenges in the Credit Underwriting Process

The credit underwriting process is riddled with challenges:

1. Risk of Defaults

According to industry reports, the default rate for business loans can fluctuate, impacted by economic conditions and market trends. This variability makes risk assessment a high-stakes task.

2. Time-Consuming Evaluations:

Traditional underwriting processes are often lengthy, sometimes taking weeks or months. This delay can be detrimental in a fast-moving business environment.

3. Under-funded Ecosystem:

Small and medium-sized businesses (SMBs) frequently struggle to secure loans due to stringent and complicated document requirements from lenders.

4. Data Inaccuracy:

Inaccurate or incomplete data can lead to poor lending decisions in unwarranted rejections or risky approvals.

A pivotal source for much of this crucial data lives in each applicant’s accounting system, but access to this data remains challenging. The traditional process outlined involves each business applicant uploading PDF documents to your website or sharing them via email, significantly slowing down the assessment timelines. If applicants provide incomplete information, the back-and-forth for required documents hampers the timeline even more.

Opting to assess risk based on only transaction or bank data leads to increased risk due to incomplete information. The traditional process causes a forced dilemma between slower processing times and incomplete data. RootFi's Unified API addresses these challenges head-on, offering a more streamlined, accurate, and efficient underwriting process.

Benefits of Using Accounting Integrations in Credit Underwriting via RootFi’s Unified API

For Lenders Providing Business Loans

  • Enhanced Risk Assessment: Access to real-time, comprehensive financial data allows for a more accurate risk assessment.
  • Increased Efficiency in Processing Times: Access to real-time accounting data will significantly speed up the underwriting process, enabling faster decision-making in underwriting.
  • Standardized Data from Every Platform: Leveraging accounting integrations via a Unified API provider like RootFi allows lenders to access data in a standardized format, reducing the mental load of analyzing data in different formats preferred by various accounting platforms.
  • Dynamically Change Credit Rates and Limits: With access to real-time accounting data, you can dynamically change credit rates and increase credit limits based on your business customers’ performance.
  • Instant Market Expansion: Simplified processes open avenues to cater to a broader spectrum of customers. RootFi offers integrations to 15+ accounting platforms, making each platform’s business customer a potential customer to you.

For Businesses Receiving Loans

  • Reduced Application Friction: Providing a way for loan applicants to authorize data access into their accounting systems reduces the friction in preparing financial documents required in traditional loan processes.
  • Quicker Loan Approvals: Streamlined data access means less back-and-forth and stress in collecting and sharing the right data and documents, leading to faster loan processing.
  • Better Loan Terms: Accurate data can lead to more favorable loan terms based on a true understanding of your customers’ business's health, which can be dynamically changed based on business performance.
  • Improved Operations: Receiving better loan terms and fast approval allows your business customers to improve their operations, revenue and profitability.

4 Ways You Can Use RootFi’s Unified API for Credit Underwriting Solutions

1. Term Loans

A term loan is a lump sum of money repaid over a fixed period with regular installments of principal and interest. Term loans are ideal for major purchases like equipment or expanding operations.

  • Typical Documents Required: Business plan, financial projections, tax returns, personal guarantees, collateral documentation.
  • Key Data Points Required: Projected cash flow, debt-to-equity ratio, profitability, credit score, and collateral value.

The traditional process for underwriting a term loan involves credit checks, financial statement analysis, and cumbersome paperwork. The process can be time-consuming and lacks real-time insights into business performance. Accounting integrations provide real-time access to updated financial data, enabling quicker and more accurate assessments for term loans.

2. Working Capital Loans

Working Capital Loans are a form of short-term financing to bridge the gap between current assets and liabilities to support day-to-day operations.

  • Typical Documents Required: Accounts receivable and payable aging reports, bank statements, inventory reports, and business tax returns.
  • Key Data Points Required: Accounts receivable aging, inventory turnover, current ratio, operating expenses, and historical sales trends.

The conventional process relies heavily on historical financial performance and projections, which can be time-consuming to prepare, provide, and analyze. This loss of time in reviewing documents also creates a data accuracy gap between the data provided in the application and real-time data. Accounting integrations provide up-to-date financial data, ensuring lenders have a comprehensive view of every applicant’s current financial health.

3. Business Credit Cards & Expense Management

As an expense management provider, you may offer expense cards as a product. Business credit cards offer streamlined expense management tools for employees.

  • Typical Documents Required: Financial statements and business tax returns, applicant and key employee credit history, spending limits, and authorization controls
  • Key Data Points Required: Historical spending patterns and budget adherence, risk profile relative to the industry, and individual cardholder creditworthiness.

Traditional assessments are often based on credit scores and historical financial data, which may not accurately reflect a business's present financial state and trajectory. RootFi's solution facilitates a more nuanced evaluation using current accounting data, allowing you to enhance expense card offerings dynamically.

4. Invoice Financing

Invoice financing, also known as accounts receivable financing, involves borrowing against outstanding invoices due from customers, helping a business improve cash flow, fulfilling their accounts payable, and reinvesting in their growth.

  • Typical Documents: Copies of invoices, customer credit reports, bank statements, business tax returns, historical accounts receivables aging
  • Key Data Points: Average invoice value and aging, customer payment history, creditworthiness of buyers, business financial health.

The conventional processes for invoice financing requests can be time-intensive due to the verification required to prevent fraud. Accounting integrations can streamline the process by offering quick access to accurate financial data directly from the applicant’s accounting system, reducing the time and risk involved in invoice financing.

How to start transforming your credit underwriting process with RootFi’s Unified API

Getting started with RootFi is a simple process and only requires a simple front-end interface lenders can use to view your applicants’ accounting data. Our team is always happy to help guide you if you’re unfamiliar with building out a front-end interface:

  1. Sign up for a free account and get familiar with our services.
  2. Use RootFi’s Data Coverage Tool to understand what data you can read into your interface from each accounting system.
  3. Use RootFi’s Documentation to connect your interface to every accounting system via RootFi’s API calls.
  4. Use RootFi’s secure Connect SDK to add a drop-in component in your interface so applicants can seamlessly allow data access from their accounting platform.
  5. Go live with your connected solution and watch the credit underwriting process transform!

Leverage RootFi’s Unified Accounting API to Transform your Business Loan Approval Processes

RootFi's Unified API revolutionizes the credit underwriting process for business loans. Integrating comprehensive, real-time accounting data addresses the traditional pain points of risk assessment, efficiency, and accuracy. For loan providers and businesses alike, RootFi's technology paves the way for more informed, quicker, and safer financial decisions.

Harness the power of accounting integrations to streamline your credit underwriting processes and gain a competitive edge in the market. Start leveraging accounting integrations by signing up for free or booking a personalized demo.

Embrace the power of RootFi's Unified API to transform your credit underwriting process and step into a world of efficient, data-driven financial solutions.

Integrate faster with Integration Labs

Integrate your product with 20+ accounting, payments and e-commerce platforms today.