Underwriting, shown
The Tenon Score and the credit box
Most of underwriting is arithmetic, so Tenon shows it: a box with a stated rule for saying no, a coverage test on the cash the bank account actually shows, and a scorecard whose every line a lender can recompute from the worksheet.
Step one · Pass or fail
The box comes before any score.
A file that misses any one of these is not listed. It is not “a low score”; it never reaches the scorecard. The box decides yes or no; the tier sets the rate inside a published band.
Who the business is
- Active and in good standing with the Utah Division of Corporations; EIN matches IRS records
- The person signing can bind the business
- The business, every owner of 25% or more, and every guarantor clear a sanctions screen
- Principal place of business in Utah, to start
History
- 24 months operating with continuous bank history (a predecessor bought as a going concern counts)
- The guarantor-owner has run the business for at least 12 months
- No open bankruptcy, and none discharged within 7 years, for the business or any guarantor
- Open tax liens plus unsatisfied judgments of $10,000 or less, combined
The bank account
- Positive operating cash flow over the trailing twelve months, after the owner is paid
- No more than 3 returned items in six months and 10 negative-balance days in ninety
- The debt schedule matches what the bank drafts and the lien search show
- Deposits reconcile to the tax return, or there is an accepted written explanation
The request
- $25,000 to $500,000, 6 to 60 months
- A business purpose, evidenced: an equipment quote, a vendor invoice, a payoff letter, a signed lease — not only a certificate
- A refinance names the debts being retired, with payoff letters, and the closing pays those creditors directly
The guarantor
- Every guarantor’s consumer credit score is 620 or better
- Pulled only with the guarantor’s written authorization, as a soft inquiry; lenders see a tier, never the report
The lien
- Every creditor with a blanket lien ahead of the lenders on the loan, and not being paid off, has consented in writing
- After realistic haircuts and anyone ahead in line, the pledged collateral covers at least 50% of the loan
- A personal guarantee from the owners and a UCC-1 filing on every note
Exceptions are rare and written down. Tenon may record an exception to exactly one of these per file, with the reason on the credit memo and shown on the listing to every lender. There is never an exception for identity, sanctions, negative operating cash flow, or a prior default on a loan arranged through Tenon.
Step two · The coverage test
1.25 coverage after the new payment.
Take twelve months of the business bank account. Add up customer receipts; subtract everything paid to run the business; charge the owner a living wage even if they did not take one; allow documented one-time costs back, within a cap. That is cash available for debt service — observed, not projected.
Divide it by a year of debt payments: every existing loan, less any being paid off at closing, plus the new payment with interest included. The new payment is computed at 12%, the top of the band, so the test does not depend on the rate tier it feeds.
| Coverage | What happens |
|---|---|
| 1.25× or better | Passes. The file goes to the scorecard. |
| 1.00× to 1.24× | Not declined, not listed as asked. Tenon computes the maximum amount at the same term that reaches 1.25× and offers that amount, a longer term, or a refinance of debt whose payment is bigger than the new one would be. |
| Under 1.00× | Declined, in writing, with the number. |
Worksheet · Coverage · Illustration, a fictional business
| A. Cash available for debt service, trailing 12 months | $210,000.00 |
|---|---|
| B. Existing debt payments, per year | $39,996.00 |
| C. New payment on $150,000 over 36 months at 12%, per year | $59,785.76 |
| D. Debt service with the new payment (B + C) | $99,781.76 |
| Coverage (A ÷ D) | 2.10 |
Check: $210,000.00 ÷ $99,781.76 = 2.10, at or above 1.25, so the file passes to the scorecard. The same business asking $400,000 would be at 1.05: not declined, but offered the maximum amount that reaches 1.25 at that term instead.
Step three · The scorecard
100 points, 7 lines, three tiers.
Only files that pass the box and the coverage test are scored. Each line is arithmetic on the verified profile, so a lender can recompute every one of them from the worksheet. One adjustment is applied for the industry’s typical margin and seasonality, then the total is clamped to 0 to 100.
| Component | Points | What it asks |
|---|---|---|
| Debt-service coverage | 30 | Can the business cover every debt payment, including the new one with interest, from the cash the bank account actually shows? |
| Cash-flow stability | 15 | How steady are monthly deposits, were there returned items, and is there a cushion in the account? |
| Guarantor credit | 15 | How has the person signing the personal guarantee handled their own obligations? |
| Leverage | 10 | How much total debt, including this loan, is the business carrying relative to its cash flow? |
| Business credit history | 10 | Does the business pay its trade creditors on time? |
| Time in business and owner tenure | 10 | How long has the business operated, and how long has this owner run it? |
| Collateral | 10 | After realistic haircuts and anyone ahead in line, how much of the loan does the pledged collateral cover? |
| Industry adjustment | +3 / -5 | A small, stated nudge for industries with structurally lower or higher risk. It is the only non-arithmetic line, and it is shown. |
| Total | 100 | Before the adjustment; then clamped to 0 to 100. |
| Tier | Score | Borrower rate |
|---|---|---|
| Tier A | 80 to 100 | 8.5% |
| Tier B | 65 to 79 | 10% |
| Tier C | 50 to 64 | 12% |
| Under 50 | Declined in writing, with the three weakest lines named, even though the file passed the box. | |
Every rate carries 1.5 points at funding beside it. Three tiers on purpose: a finer ladder would be false precision until there are a few hundred seasoned loans. The rate is set before listing and does not change for the life of the note.
Inputs
What moves the score
- Coverage carries 30 points because it is the one number that says whether the payment gets made.
- Stability and guarantor credit are 15 each: steadiness of the deposits, and how the person behind the personal guarantee handles their own obligations.
- Leverage is measured against cash flow, never against revenue. Revenue is not cash.
- Collateral is counted after haircuts and after everyone ahead in line, so a lien that recovers nothing scores nothing.
Not inputs
What does not move it
- Who you know. The score is arithmetic on the profile.
- The story. The narrative is on the profile for lenders to read; it is not in the score.
- Verification. When Tenon has confirmed a fact against its source — a tax return, a bank feed, a state filing — the profile shows a badge on that fact. A badge, not a point: a verified weak number is still a weak number.
- Anything the law says cannot be considered. The inputs are the business’s numbers, full stop.
If the answer is no
A no comes with a reason.
A decline is not a verdict on you or your business. Many good businesses are outside the box this year and inside it next year. Every decline and every counteroffer comes in writing, names the reason, and says what would change it.
Coverage short
The letter states the amount that would have passed at the same term. Reapply with that amount, a longer term up to 60 months, or a refinance that retires expensive debt — or after twelve months of bank statements showing stronger operating cash flow.
Negative cash flow
Reapply after six consecutive months of positive operating cash flow in the bank account, with the twelve-month trailing figure positive.
Lien not recoverable, or senior consent missing
Pledge additional unencumbered collateral, reduce the amount, obtain the senior creditor’s written consent, or pay that creditor off at closing.
Returned items or overdrafts
Reapply after six months with no returned items and no negative-balance days.
Time in business or owner tenure
Reapply on the date the threshold is reached; the letter states that date.
Guarantor credit, liens, or undisclosed debt
Reapply when the score is 620 or better or with an additional qualifying guarantor; with liens satisfied or under an installment agreement in good standing; or with a complete debt schedule reconciled to the bank account.
Two doors. One set of rules.
Want to see your own numbers the way a lender would?
I run a business and need a loan.
Read the credit box, check the math, and send a short interest form. A person replies, and the answer comes with its reason.
Apply