Similar to identity theft, this type of fraud happens when an unauthorized individual gain access through online banking applications, capturing the account information to create and write bad checks.
An adverse action notice is a document sent to a loan applicant stating a bank’s rationale for denying a loan. It may also contain a counteroffer, such as a lesser amount or a request for an approved co-borrower.
The term “aging exceptions” refers to a group of critical exceptions that have not been resolved within a reasonable amount of time.
Altered check fraud occurs when a fraudster changes the amounts and Payee from a stolen check.
Audit and exam prep is a process that financial institutions go through in order to adequately prepare for upcoming audits and exams.
An authorized signer form is a document that allows an account holder to grant a range of clearance levels to individuals to perform certain functions within a bank account.

What are Multiple Guarantors?

The phrase “multiple guarantors” is used by financial institutions when describing a loan that is guaranteed by more than one entity. A guarantor could be an individual, LLC, corporation, or another type of entity. 

Challenges of Multiple Guarantors

Loans involving multiple guarantors can be operationally challenging for financial institutions to administer due to:

  1. Relationship Complexity

    Efficiently managing multiple guarantor relationships (and understanding how they’re all connected) requires careful recordkeeping, especially for financial institutions with large commercial lending portfolios. Situations involving subsidiaries and related entities can make it especially difficult to gain a complete view of cash flow.
     
  2. Tracking Complexity

    Increased document tracking is to be expected when multiple guarantors are involved. In addition to monitoring the principal borrower’s creditworthiness, banks and credit unions regularly request financial statements and other documentation from additional guarantors. Identifying missing documents, generating and distributing notice letters, and following up with customers or members takes time and effort.

Multiple Guarantors Example

To better illustrate these challenges, let’s imagine that an entrepreneur named Tony needs a loan for renovating his restaurant. Tony owns five other restaurants, each of which are organized as separate LLCs. He plans to list each LLC as a guarantor on the loan, in addition to providing a personal guarantee. To further complicate matters, two of the restaurants involve a co-owner—who recently retired and now lives in a different state.

Simply understanding the nuances of such complex business relationships could require numerous conversations and considerable amounts of documentation. Efficiently tracking everything on an ongoing basis could prove to be even more challenging.

Managing Multiple Guarantors

Traditionally, financial institutions relied on paper-based filing systems to organize and track commercial loans—including those that involve multiple guarantors. Paper loan files make it difficult to gain a holistic view of each relationship. Pulling hard copy files from a central location is time-consuming and, in some cases, not possible if a file is already checked out to another team member. Tracking correspondence and missing documents in spreadsheets or checklists poses numerous risks for errors and oversights.

Software like AccuAccount can alleviate many difficulties that are commonly associated with multiple guarantors. AccuAccount provides an intuitive way to view and link together entity relationships as well as streamlining exception tracking and reporting.

Explore Additional Resources

Browse dozens of banking definitions or visit our Innovation Hub to access case studies, infographics, videos, white papers, and blog articles.


 

Explore more resources

Remote Deposit Capture (RDC) eBook

Remote deposit capture (RDC) ranks as a significant feature of modern banking. In fact, a San Global Research industry report projects the RDC market to grow at a compounded rate of 5.8% through 2032. As the banking industry continues its digital...
Read More »

AccuAccount: Solution Overview Brochure

Track and manage every loan document in one system and streamline loan management from application through servicing with our core-integrated software platform. From loan application automation, to drag-and-drop document imaging, to document tracking, and five...
Read More »

Related articles

Monday 13 May 2024

Unraveling the Complexity: How ECM/EIM Solutions Tackle Information Chaos

In today's digital age, data is often hailed as the new currency. However, this surge in data production has given rise to a new challenge…

Read the Blog

Thursday 9 May 2024

Beyond the Screen: The Value of In-Branch Banking for Young Consumers

Is in-branch banking regaining popularity? Bank and credit union leaders should not count the branch out just yet. In fact, some of the largest institutions…

Read the Blog

Tuesday 30 April 2024

Loan Management & Exception Tracking: Quickly Summarize Exceptions by Officer, Branch, or Category

Banks and credit unions need accurate, reliable, and easy-to-understand exception reports. However, pulling exception data together can involve considerable administrative work for back-office staff. Financial…

Read the Blog

Wednesday 17 April 2024

Why Should Credit Analysts Use AccuAccount?

Credit analysts need reliable access to credit documentation in order to do their jobs well, including account holder financial health data. Although it is frequently…

Read the Blog

Tuesday 9 April 2024

Advocating for Streamlined Document Management at Your Financial Institution

Implementing a system like AccuAccount can enable numerous efficiencies for commercial lending teams. Expedited access to loan documents, reduced paper, enhanced exception management and reporting…

Read the Blog

Monday 1 April 2024

[Playbook] Loan Management: Efficiently Manage Notices

Although notices serve as an essential form of communication with account holders, managing notices can involve considerable administrative work for loan assistants, insurance clerks, and…

Read the Blog

Tuesday 26 March 2024

Check Fraud: Common Examples and How to Stay Ahead of the Fraudsters

Check fraud is the most prevalent type of fraud at financial institutions, costing billions of dollars in losses annually, while impacting millions of account holders…

Read the Blog

Wednesday 20 March 2024

Accelerating Efficiency by Leveraging Alogent’s Full Suite of Process Automation Solutions

Why should your bank or credit union consider implementing FASTdocs alongside AccuAccount? For financial institutions looking to retire legacy systems, consolidate vendors, and reduce paper-based…

Read the Blog