Loan origination
The process of creating a new loan, from application and underwriting to approval, closing and funding, done by the lender that makes the loan.
What loan origination is
Loan origination is how a lender creates a loan: taking the application, verifying the borrower, underwriting, deciding, preparing documents and funding. In embedded lending, a platform often runs the experience while a bank originates the loan as lender of record.
How it works
The lender sets a credit policy, then checks each application against it, including identity, income, credit history and fraud signals. Most consumer loans come with Truth in Lending Act disclosures. After funding, loans may be held, serviced or sold, sometimes through securitization.
- 01 · APPLY The borrower submits an application, directly or through a lending platform.
- 02 · UNDERWRITE The lender verifies identity and income and checks the credit policy.
- 03 · FUND Approved loans close, and funds are disbursed to the borrower or merchant.
When businesses use it
- Banks originating loans offered through fintech lending platforms
- Point-of-sale and buy now, pay later programs at checkout
- Small business, auto, solar and home improvement lending
- Second-look programs that match declined applicants with other funders
Cross River offers an API-based platform for origination and funding, covering application import, underwriting and compliance validation, and disbursement over ACH, checks and account-to-account transfers. Programs can sell loans to purchasers or use warehouse lines and co-lending. See marketplace lending at Cross River.