Reference
Definitions of common terms used in commercial finance, referral partnerships, and declined deal placement. For brokers, vendors, CPAs, and borrowers.
A lender's set of credit criteria—minimum FICO score, revenue thresholds, time in business, and other factors. Deals that fall outside a lender's credit box are typically declined. Different lenders have different credit boxes. See lenders for low credit business loans.
A business financing application that a lender has turned down. Declined deals may be submitted to second look or alternative lenders through referral networks. A decline from one lender does not mean no options exist. See declined business loans guide.
A limit on how much a lender will fund to a single borrower, industry, or geography. When a lender hits its exposure cap, it may decline new deals even if they otherwise fit. Another lender may have capacity. See when lender hits exposure caps.
A contract between a financing firm and a referral partner (broker, vendor, CPA, advisor) that defines compensation, process, and protections. Referral partners typically must sign before submitting deals. See referral agreement.
Compensation paid to referral partners when a financing deal closes. Often expressed as a percentage of gross commission (e.g., 35% revenue share). Payment is typically issued within 30 days of funds received. See referral fees.
A financing source that reviews business loan applications previously declined by other lenders. Second look lenders may have broader credit standards or different program guidelines. Brokers and advisors with referral relationships can submit declined deals for second look review. See second look business lenders.
A financing request that does not fit traditional lender programs—due to credit, structure, industry, or other factors. Hard-to-place deals may be submitted to alternative placement networks. See hard-to-place business loans.
An entity that originates or refers commercial financing deals to lenders. ISOs often participate in referral or placement programs. See commercial lending ISO program.
A clause in referral agreements that restricts either party from bypassing the other after an introduction. Protects referral partners from being cut out of compensation. See non-circumvention referral agreements.
Provisions that require repayment of referral compensation if a deal defaults or is paid off early. Clawback terms vary by agreement. See understanding clawbacks in referral agreements.
