Not a loan origination software

Lenders use all kinds of loan software solutions to support their operations.

loan origination software

loan servicing software

loan recovery software

etc.

But what didn't sit right with me as an engineer is that modern lenders offer credit products that aren't quite loans.

Or at least not in a way you'd expect when you think of a loan.

Credit cards

Lines of Credit

Bullet Loans

Construction Loans

Lombard Loans

Overdrafts

BNPL Plans

Invoice Factoring

Leases

Merchant Cash Advances

While some have a Loan in their name, the behaviour is substantially different from one another.

You can still figure out and model these credit products using software.

But what makes it hard is that lending companies tend to have more than one product.

For example, single business lenders can offer business loans, merchant cash advances, and sometimes even BNPL solutions.

I'd avoid different entities for each product type.

Because when it's time to display all "loans" on the borrower profile, you'll have a hard time making a union from multiple entities.

How do you reflect this in software design?

The missing piece here is a parent entity type that all products inherit.

Which entity?

Credit Facility

Credit cards, lines of credit, BNPL plans, Mortgage Loans, etc, are all credit facilities.

A credit facility is an agreement that defines the terms on which a lender extends credit to a borrower:

• Interest Rate

• Principal Amount

• Disbursement Date

• Repayment Type

• etc

And credit products are implementations of this general concept:

• Personal Loan is a Term Credit Facility

• Credit Card is a Revolving Credit Facility

• Construction Loan is a Multi-Draw Credit Facility

• Business Credit Line is a Revolving Credit Facility

By modelling all products as specialised forms of CreditFacility, you get:

• Consistency: All lending products share core attributes (limit, rate, term, status).

• Maintainability: Add new products by extending the Credit Facility type

• Compatibility: You can search and execute operations across different product types

In the context of modern lenders, you're building not loan software but credit facility software.

That's it for today.

I hope this gave you some useful ideas for building better lending software.

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