A Credit Box is the objective set of requirements, or investment criteria, that an underwriter uses to determine whether or not to make a loan.
A lender's credit box typically sets thresholds on the borrower's size, growth, margins, collateral, cash position, existing debt, and industry. Applications that fall inside the box move forward to underwriting, and those that fall outside are declined or need an exception. Because the criteria are explicit, a credit box lets a lending team screen opportunities consistently and lets borrowers judge quickly whether they are likely to qualify.
The "functional credit box" refers to the universe of loans that are actually available to borrowers across the market. Lenders widen or narrow their boxes as their risk appetite, funding costs, and economic conditions change, so the same borrower can qualify in one period and not in another. Each lender's specific criteria define its own credit box, and the 📝Assembled Brands Credit Box is one example. An 📝Investment Committee is typically responsible for keeping a lender's portfolio inside its box.