Reducing Risk for Unsecured Loans
As a condition of loan approval, some clients may be required to submit cash collateral and/or a
credit-worthy cosigner(s) depending on the project type and loan amount. In some cases, a cosigner may be required to become the primary and, therefore, the responsible party to pay the loan. These tools help reduce the overall risk of default while still providing access to capital for unsecured loans.
CASH COLLATERAL
Cash collateral is an added security measure for unsecured home improvement loans, such as roofs, windows, doors, insulation, and other projects that cannot be securitized with a UCC. In some cases, it may be required in addition to a UCC. Cash collateral is not a down payment, which reduces the principal. Instead, it is like a “good-faith deposit,” which is repaid at the end of the loan.
The loan balance is regularly monitored, and the client will be notified when the remaining balance approaches the cash collateral amount. At that time, the client(s) can choose one of the following options:
o Pay off the loan with the cash collateral and the remaining amount, if applicable, will be
refunded, or
o Pay the loan in full by going to term and then the cash collateral will be refunded in full
once the loan has been satisfied.
Important:
o Cash collateral will be applied to the loan loss reserve, in SELF’s escrow account, and will
ONLY be used for the purpose of loan collateral only.
o This loan collateral does not constitute in any way a downpayment.
o Cash collateral cannot be used in lieu of a payment or multiple payments missed or planning to be missed.
o In the case of a bankruptcy, death, and/or default, all of the cash collateral submitted
will be utilized to reduce the loan principal balance, prior to legal action and/or charge-off of the loan.
o Cash collateral may be paid online at https://solarenergyloanfund.org/client/cash collateral-payment/ or by cashier’s check or money order sent to P.O. Box 5506, Fort Pierce, FL 34954 or by calling Accounting at 800-476-7353.
COSIGNER(S)
Cosigner(s) (also known as co-borrowers) help reduce risk and increase approval success. Since we use budget-based financing criteria and proof of ability to repay, it is beneficial to the overall application if all parties apply. As noted above, an additional “creditworthy” cosigner may sometimes be required due to poor credit history or insufficient income to repay the loan.
“Creditworthy” cosigners have strong credit histories and sufficient income to pay the loan in
the event the applicant(s) cannot. Co-borrowers are equally responsible for all SELF loans as a
joint signer. Although SELF does not use credit score as one of its determining factors, based on
our experience, and as a guideline to help clients identify potential cosigners, “creditworthy”
cosigners usually have credit scores around 680 or above.