A credit committee is the group inside a lender that decides on loans above the amount a single loan officer is allowed to decide alone.
Lenders layer their authority. A loan officer can decide alone up to a set amount. Above it, the request goes to a senior officer, then to a committee of officers, and for the largest loans to a committee of the board or the full board. The amounts are set by each lender’s own policy.
For federal credit unions the committee is written into law. If the bylaws provide for one, it has an odd number of members, includes no more than one loan officer, meets at least once a month to consider loan requests, and decides by majority vote with a majority of the full committee present. It may delegate authority to loan officers, and it reviews requests a loan officer turned down.
Three things follow for a borrower. The person you meet is often not the person who decides, so the written package has to make the case without you in the room. Timing depends on when the committee next meets. And a term sheet issued before committee is not a decision.
Ask the loan officer at the start what level your request must reach.
How it shows up in the data here
Committee members, meeting dates and loan officer authority levels are not in any public file. What the data can show is the scale that drives them: the legal lending limit estimate gives a rough largest single loan from a bank's capital, and a request near that size will go to the highest level. Each lender page shows the balances the lender already holds by loan type.
Go further
- Legal lending limit estimate: A rough largest single loan for a bank.
- Lenders: Every lender page, with balances held by loan type.
- Legal lending limit estimate: The most a bank can lend to one borrower, from public capital figures. Always an estimate.
- How to find the right person at a bank for a loan: The main number reaches a branch. A commercial loan is handled by a commercial lender, and at many banks there are only a few. Finding that person is half the work of a first contact.
- How bankers evaluate a commercial loan deal: A credit officer asks one question five ways: how will this loan be repaid, and what happens if it is not? Knowing the five tests lets you size a request before you send it.
- How to place a business loan with a credit union: Credit unions make business loans, and some make a lot of them. Three things are different from a bank: the borrower must be a member, most credit unions work under a cap on business loans, and the limit to one borrower is set against net worth.
Related terms
- House limit: A cap a bank sets for itself, below the legal lending limit, on how much it will hold for one borrower, one property type or one market.
- Legal lending limit: The most a bank may have outstanding to one borrower by law. For national banks it is 15 percent of capital and surplus, plus 10 percent more when the extra is fully secured by readily marketable collateral.
- Term sheet: A term sheet is a short written outline of the loan a lender is prepared to consider: amount, rate, term, fees and main conditions. It is usually not binding.
- Commitment letter: A commitment letter is the lender's written, binding promise to make a loan on stated terms, if the conditions listed in the letter are met by a set date.
- Originator: An originator is the person, or the lender, that brings in a loan request and carries it through to closing.
- Community bank: A community bank is a smaller bank that takes deposits and lends mostly in the area around its offices, and decides on loans close to home.
- Credit union: A member-owned cooperative lender. It lends to the people and businesses inside its field of membership and files a call report with NCUA every quarter.
Sources
Plain definitions for orientation, not legal, tax or credit advice. A lender's own policy decides what it will do.