Q2 Originate supports the following types of product categories:
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Loan – A lending institution or a bank provides a fixed sum of money to a borrower for a fixed period of time that needs to be repaid as per a specified schedule. Loans may be extended to individual borrowers, as Consumer Loans, or to businesses, as Commercial Loans. Most consumer loans are not collateralized.
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Lease – A lease provides finance against a piece of equipment or an asset. The borrower gets the funds to acquire an asset, and after the term of the lease, the borrower can either buy or return the asset.
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Line of credit – A line of credit is a flexible loan from a lending institution to an individual or a business. It is an approval to use a fixed amount of money, over time, based on a borrower's needs. This can involve a commitment fee or an interest payment on the borrowed amount. The borrower can draw upon the maximum loan balance (the credit limit).
Note
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You can define the application and approval workflow for multiple product types within each of these by setting up CL Products in the Skuid enabled Q2 Origination (Release 1.2000 and later).
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For information on setting up a CL Product, refer to the Setting up a CL Product section in the Q2 Origination Administration Guide.
The model of credit evaluation of the borrower, underwriting of the application, documentation and contract creation, and information collection and recording, therefore, are different for each of these products. For example, in the case of a loan, you may evaluate the credibility of the borrowers, their financial stability, and their ability to repay. In the case of a lease, you would evaluate not only the borrower's credibility but also the net worth of the equipment that you are financing to decide the amount you want to finance. Similarly, for a line of credit, how much your organization can approve for credit, how long will the cash flows continue, how to evaluate the underlying security for it are important considerations.
For each type of lending product, the creditworthiness of a borrower is evaluated differently, as follows:
Lending Product |
Credibility Factors |
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Loan |
Income, cash flow, outstanding debt, ability to repay, and to some extent, the purpose for which the loan is requested. |
Lease |
The borrower's creditworthiness, the net worth of the underlying equipment, the percentage of the equipment value to be financed. |
Line of Credit |
Duration for which the cash flow must continue, how much credit may be allowed, underlying security, if any. |
Product Offerings
The following are some of the common offerings for the different lending products modeled using Q2 Origination:
Type |
Description |
Examples |
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Consumer Secured |
A consumer secured loan
Consumer loans are monitored by government regulatory agencies for their compliance with consumer protection regulations. |
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Consumer Unsecured |
In an unsecured loan, a borrower does not need to provide any collateral, as security against the loan, to the lender. This is also called a non-collateralized loan. |
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Consumer Real Estate |
A consumer real estate
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Commercial Unsecured Loan |
A commercial unsecured loan is
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Business Line of Credit
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Commercial Secured Loan |
A commercial secured loan is
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Commercial Real Estate Loan |
Commercial real estate is used to generate an income solely for business purposes. A commercial real estate (CRE) loan typically facilitates the financing of the acquisition, development, and construction of these properties. |
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Finance Lease |
A finance lease is used to purchase equipment for the major part of its useful life.
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Operating Lease |
An operating lease contract is used to finance equipment for less than its useful life.
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