Glossary · underwriting

Loan committee

Also called credit committee, credit approval.

The group inside a bank or SBA lender with authority to approve credit above a threshold — the only party whose 'yes' means anything.

Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.

What it means

Bank credit decisions are made under a delegated authority structure. Small, clean requests may be approved by an individual credit officer within their limit. Anything larger, anything policy-exception, and most SBA files go to a committee.

The path a file takes

  1. A business development officer or relationship manager sources the deal and takes the application
  2. Underwriting or credit analysis builds the spread: historical and projected financials, global cash flow, collateral analysis, industry comparison
  3. A credit memo is written recommending approval, decline, or approval with conditions
  4. Committee reviews, questions, and approves, declines, or approves with additional conditions
  5. Conditions are cleared, documents are prepared, closing

Why timelines slip

Committees meet on a schedule. Missing a meeting costs a week or two. A condition raised at committee sends the file back for information, and the next slot is another cycle. This is the main reason SBA timelines are measured in weeks and months while short-term funding is measured in days — the difference in cost between the two products largely buys the difference in speed.

Common conditions

Additional collateral, a larger equity injection, a guaranty from a party who had not expected to give one, life insurance, a covenant package, subordination of owner loans, or an interest reserve.

Where this one catches people

"You're approved" from a business development officer is not an approval. It means the file looks fundable to someone whose compensation depends on volume and who does not hold credit authority. Nothing is approved until committee has signed and conditions are issued in writing, and the difference matters enormously if you have signed a purchase agreement, given notice on a lease, or turned down other financing on the strength of it. Ask specifically: has this been to committee, and can I see the conditional commitment.

Where you will meet this term

Term Loan Business Line of Credit SBA Loan Asset-Based Lending

Read next

CovenantA promise in the loan documents about what the business will do, will not do, or will keep true, breach of wh… Global cash flow analysisAn underwriting method that adds the owner's personal income and personal debt to the business's, on the theo… Letter of intent (LOI)A short document setting out the principal terms of a proposed deal, mostly non-binding on the commercial ter… StipsThe documents and conditions an underwriter requires before an approval turns into funded money — the list th… Term sheetA summary of proposed terms issued before contract documents, mostly non-binding as to the financing itself b… UnderwritingThe lender's assessment of whether and on what terms to fund, which in the bank-statement market is driven fa…

Loan committee — common questions

What does loan committee mean?

The group inside a bank or SBA lender with authority to approve credit above a threshold — the only party whose 'yes' means anything.

Where does loan committee catch people out?

"You're approved" from a business development officer is not an approval. It means the file looks fundable to someone whose compensation depends on volume and who does not hold credit authority. Nothing is approved until committee has signed and conditions are issued in writing, and the difference matters enormously if you have signed a purchase agreement, given notice on a lease, or turned down other financing on the strength of it. Ask specifically: has this been to committee, and can I see the conditional commitment.

Is loan committee the same as an interest rate?

Loan committee is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.

Which products does loan committee apply to?

Term Loan, Business Line of Credit, SBA Loan, Asset-Based Lending.

Is there a worked example of loan committee?

Not on this entry. Where a term is arithmetic, the arithmetic is shown; this one is not primarily a calculation.

What else should I read alongside loan committee?

Covenant, Global cash flow analysis, Letter of intent, Stips, Term sheet.

Has this definition been checked?

Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.

Is this legal advice?

No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.

Can I suggest a term?

Yes — [email protected]. The glossary grows from what people are actually shown in contracts.