Policies and Procedures
The Policies and Procedures Appendix provides additional details on Credora's consistent implementation of the Credit Methodology. We understand the importance of keeping these policies and procedures relevant and effective. Therefore, this Appendix is subject to regular updates and may be changed at any time in order to maintain the highest standards of transparency and accountability.
Financial Submission
Credited Statements
To be credited for a month of financial statements, borrowers must submit balance sheet and income statement reports for the respective period. The financial statement evaluation period spans the trailing 24 months. Only financials submitted in this period will be considered.
Gaps in Time Series Data
A minimum of 12 consecutive months of financial statements will be required to achieve max points for Performance factors. Otherwise, the Performance, Operating Margin, and Interest Coverage factors will be discounted as follows:
| Consecutive Months of Data | Score Discount |
|---|---|
3 Months | 75% Discount |
6 Months | 50% Discount |
12 Months | No Discount |
The following exceptions are provided with respect to the discounts:
Funds may provide monthly returns in the form of a marketing one-pager, in lieu of an income statement. In such cases, Operating Margin and Interest Coverage will receive 0 points.
Borrowers whose entity is greater than 6 months old but less than 1 year old will be credited 12 months of financial history if all financial statements since inception are submitted. In these cases, the Borrower’s performance scores will be discounted by 25%.
Credit Events
In the event of a Borrower defaulting on a loan or undergoing a material restructuring, their Borrow History - Time will be reset to 0 months. The Borrow History - Time factor will score 0 until the next repayment of principal on an unsecured or undercollateralized loan is made. Additionally, for the 3 months following the default, the Borrower will not receive any points for the Borrow History - Repayments factor.
Account Statement Submission
In the context of asset validation, statements from brokerage accounts, bank accounts, and exchange accounts can positively impact points where Credora does not support the underlying venue. The policies for approving these statements are described below.
Discount Policy
Asset values of submitted statements will be discounted based on the venue type. The discounts are outlined below:
Bank Accounts: 10%
Brokerage Accounts: 10%
Exchange Accounts: 75%
Time Considerations
Submitted account statements are required to:
Cover the period through the date of the most recently submitted balance sheet.
Be created within a reasonable timeframe of submitted balance sheets.
Lifecycle of an Approved Statement
Once a Borrower’s submission has been approved, the asset values provided in the statements will not be discounted for the next 28 days. At the end of the 28 days, the Borrower will be asked to provide updated account statements. If the Borrower provides new statements, the asset value of the updated account statements will be used, and the credited assets score will be updated. If new statements are not provided, the previous asset value will decay in accordance with the below:
Special Situations
A Borrower may have their returns adjusted in the event of a loss that is greater than 5% of the firm’s equity. These adjustments will only be made if the cause of the loss is deemed to not reflect the core strategies of the business. Where these adjustments are made, a 20 point penalty is applied to the Drawdown factor score.
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