The High Rates Small Loan Model

At a Glance

Fraud and eligibility controls determine whether the Lender can lend. During the pilot, the IBV Analytics Scorecard recommends whether the first-loan offer should be $500, $400, or $300. It is a loan-sizing input, not a stand-alone approval or decline engine. Clean files move directly to funding after reachability, account, and repayment-method controls pass. Human review is reserved for defined exceptions.

Speed-First
Fraud Is the Hard Gate
$500 / $400 / $300
Humans Handle Exceptions
Scorecard Requires Validation

Core Operating Rule

Fraud and eligibility determine whether the Lender lends. A validated IBV Analytics Scorecard helps determine how much the Lender lends. Reachability, account, and repayment-method controls determine whether a file can fund straight through. Operations determine how quickly it funds. Collection Multiple determines whether the model works.

Policy Foundation

Risk the Lender can price

Repayment volatility and ordinary credit loss are expected in a high-APR, low-principal product. The interest rate prices the frequency of repayment losses.

Risk the Lender cannot simply price

Fraud, identity mismatch, unauthorized payment methods, legal ineligibility, and an unusable repayment account are hard failures.

Exposure controls loss severity

The interest rate prices how often borrowers may pay poorly. The $500, $400, and $300 tiers control how much principal is exposed when they do.

What the current evidence supports

Pre-funding bank activity has shown moderate value for loan sizing, particularly recent income, direct-deposit dollars, and financial-obligation payments. It has not been validated as a stand-alone approval or decline gate. The IBV Analytics Scorecard must prove that it improves the Lender’s own seasoned economic results before it receives decision authority.

Three Conditions Before Full Production

1. Validate the scorecard

Confirm the score direction, range, reason codes, model version, and proposed amount bands. Run the scorecard in shadow mode before it independently changes approval or decline decisions.

2. Replace the reachability function of the live call

A clean file must still confirm real-time reachability through a one-time passcode, verified borrower response, automated verification call, or brief human verification touch. A full underwriting call is not required, but reachability cannot be silently removed.

3. Make the $400 tier earn its place

Do not assume $400 is automatically the correct midpoint between $300 and $500. Track the $400 band separately. If its seasoned Collection Multiple underperforms both adjacent tiers, narrow it, redesign it, or remove it.

Decision Flow

Automated Fraud, Eligibility, and Reachability Controls

These checks determine whether the application can continue and whether it can proceed without a full live underwriting call. Complete them in seconds wherever possible.

Identity and application consistency
Phone, email, device, and duplicate checks
Real-time reachability through OTP, verified response, automated verification call, or brief verification touch
State, product, employer, and legal eligibility
Bank-account ownership or appropriate association
Repayment-method ownership and authorization
Internal fraud or confirmed bad-actor history

Fraud or eligibility failure: hold for resolution or decline. A reachability failure by itself routes the file to exception review unless another policy requires decline.

Run the IBV Analytics Scorecard

The scorecard is a standard loan-sizing step, not merely a resolution tool. During shadow mode and the initial pilot, it recommends exposure but does not independently approve or decline. Preserve the exact response that existed when the decision was made.

Store the original scorecard and bank-data response
Store the score, score band, reason codes, and model version
Store the exact repayment checking account
Store application and decision timestamps in UTC
Store the amount eligible, recommended, offered, accepted, and funded
Record straight-through decisions, human reviews, and manual overrides

Current retrospective evidence supports the scorecard’s use as a sizing and confidence layer. Production authority must be earned through the prospective pilot.

Assign the Proposed $500, $400, or $300 Offer

Every eligible first-time applicant may qualify for up to $500. During the pilot, the IBV Analytics Scorecard recommends the appropriate exposure tier. The Lender retains the exception and override controls below.

Scorecard Result	Proposed Offer	Treatment
Tier A or strongest acceptable band	$500	Straight-through candidate when all controls pass
Tier B or middle band	$400	Provisional tier; validate separately and retain only if its economics justify it
Tier C or acceptable lower band	$300	Fast offer for a legitimate borderline borrower
Score unavailable, incomplete, or timed out	$300 maximum	Exception review when needed; never fail open to $500
Below the proposed minimum band	Manual review during pilot	Do not automate a score-only decline until the scorecard is prospectively validated and the reason is specific and documented

Numerical cutoffs should be added only after the provider confirms the score direction, range, recommended bands, and reason codes. The Lender should then recalibrate every tier using its own seasoned, cost-adjusted Collection Multiple. The $400 tier must be evaluated as its own product treatment rather than assumed to be a linear midpoint.

Fund the Clean File

Confirm real-time reachability through OTP, verified response, automated verification call, or brief verification touch
Present the final $500, $400, or $300 offer
Complete the agreement and required disclosures
Validate and authorize the repayment method safely
Fund immediately when ready-to-fund status is reached

A full live underwriting call is not required for a clean file, but reachability must be affirmatively confirmed.

Use a Human Only for a Defined Exception

Human review should resolve the named exception. It should not restart the entire application. Any concern about inconsistent or coached answers must identify the specific contradiction rather than rely on an undocumented impression.

Human Review Rules

Require human review when

The score is missing, incomplete, unavailable, or materially inconsistent with the underlying data
Real-time reachability cannot be confirmed automatically
An identity, phone, device, duplicate, or fraud alert appears
Application information materially conflicts with bank or employment information
A brief verification produces a specific unresolved inconsistency
The linked account appears secondary or unusable
Income or recurring inflows cannot be reasonably identified
Repayment-method ownership does not match
The borrower requests assistance
An employee requests an amount override

Do not require a full call merely because

The borrower uses Cash App, Venmo, PayPal, or Zelle
The account contains fees or an occasional NSF
The borrower is paying other lenders
The profile is risky but appears legitimate
The applicant qualifies only for $300
An employee wants to inspect every transaction manually

Safe Defaults and Overrides

Safe defaults

The maximum potential first-loan amount is $500
A missing score never produces an automatic $500 offer
A legitimate borderline borrower defaults toward $300
A score below the proposed minimum routes to review during the pilot, not an automatic score-only decline
A reachability failure routes to exception review unless another policy requires decline
A fraud or legal failure is held or declined, not moved into a lower tier

Override policy

An employee may reduce the offer by one tier with a documented reason
Increasing above the assigned tier requires manager approval
Every override must use a standardized, specific reason code
“Gut feeling,” “felt coached,” or another undocumented impression is not an acceptable reason
Performance must be reported with and without overrides

KPI Scorecard

Funnel and Speed

Raised hands answered within 15 minutes
Real-time reachability confirmation rate
OTP or automated verification completion rate
Approved-to-funded rate
Scorecard-to-offer time
Application-to-funding time
Straight-through funding rate
Human-intervention rate
Applicant abandonment rate

Fraud and Early Risk

Confirmed fraud loss per funded loan
Identity or account mismatch rate
Repayment-method validation failure
ACH and debit return rate
Payment revocation rate
FPD by score and amount band
Missing-score rate
Exception rate by reason

Economic Outcomes

60-day Collection Multiple
90-day Collection Multiple
120-day Collection Multiple
Delta greater than 1.00 Good Outcome Rate
Gross collection surplus or deficit
Cost per Good Outcome
Performance by $500, $400, and $300 amount band

Scorecard Validation

Good Outcome Rate and Collection Multiple by score band
Incremental lift compared with the control process
Calibration: whether observed performance matches the predicted ordering
Separate $400-tier performance versus both $300 and $500
Manual-override performance versus scorecard recommendation
Percentage of decisions supported by a complete frozen decision-time payload

Primary economic definition

Collection Multiple equals Total Collected divided by Loan Amount. Delta greater than 1.00 is principal-positive, but it is not necessarily net profitable after funded-lead cost, payment expense, payroll, and collections expense.

Launch and Validation Plan

Confirm what the IBV Analytics Scorecard is measuring, its direction, range, reason codes, model version, and proposed $500, $400, and $300 cutoffs.
Implement the scorecard in shadow mode and preserve every decision-time response.
Implement the real-time reachability control that replaces the mandatory full live call.
Pilot straight-through processing on a controlled share of clean applications.
Use the current underwriting process as the comparison group during the pilot.
Lock the cutoffs and policy rules before economic outcomes become visible.
Do not use the scorecard as an automatic decline gate during shadow mode or the initial pilot.
Evaluate the $400 tier separately. If it does not justify its exposure, narrow it, redesign it, or remove it.
Review the first 300 funded loans after consistent 60-, 90-, and 120-day seasoning.
Adjust the amount bands using cost-adjusted Collection Multiple, not FPD alone.
Expand straight-through funding only when conversion improves without an unacceptable increase in fraud loss, payment failures, or economic losses.

Final Policy Statement

The Lender will use an automated, score-tiered, exception-based underwriting model. Every eligible applicant may qualify for up to $500. Fraud and eligibility controls determine whether the Lender can lend. During the pilot, the IBV Analytics Scorecard recommends whether the first-loan offer should be $500, $400, or $300, but it does not independently approve or decline. Clean files with confirmed reachability, a validated repayment account, and an authorized payment method may fund straight through. Human review is limited to specific exceptions. Borderline but legitimate borrowers should generally receive a fast $300 offer rather than be lost to unnecessary friction. The $400 tier must independently justify its place. Performance will be managed using seasoned, cost-adjusted Collection Multiple, Good Outcome Rate, fraud loss, and cost per Good Outcome.

This operating model remains subject to applicable lending, eligibility, ability-to-pay, adverse-action, disclosure, privacy, payment-authorization, and fair-lending requirements. Numerical score cutoffs must be documented, consistently applied, and validated against the Lender’s own seasoned economic results. Any decline or amount reduction must use a specific reason supported by the actual information and policy applied.

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