Implementing Line of Credit products at Peach

Line of credit (LOC) products offer a wide range of options to lenders looking to diversify their portfolio. And while each line of credit offering comes with its own unique challenges and opportunities, we’ve built a servicing solution that is flexible enough to adapt to support multiple products side-by-side. With Peach, lenders can customize and iterate upon critical aspects of their product logic to deliver an offering that meets ever-changing market needs.

How does Peach support LOCs?

• Flexible product and draw type(s): Peach supports both revolving and non-revolving LOCs across a range of constructs like personal lines, business lines, and credit cards. Draws can be set up for different purposes, like cash advances, balance transfers, BNPL Pay over Time, or regular purchases - each with their own terms. Draw flexibility lets lenders design flexible credit programs and repayment schedules to differentiate their product and meet borrower’s financial needs.

• Line of credit structure settings: A line of credit in Peach is designed to support multiple draws (sub-lines) with independent interest rates, fee structures, minimum payment calculations, amortization schedules, and credit limits. Each draw can have its own defined credit limit, interest rate, and amortization schedule. Lenders can also set a draw's credit limit as a percentage of the overall line of credit. Peach will ensure that across multiple draws the total overall LOC credit limit is not exceeded.

• Product Configuration: Peach Loan Types govern the loan behavior, such as the grace period policy, minimum payment amounts, open-to-buy logic, utilization calculation, payment waterfall, and statement generation. Peach takes the lender’s product structure, terms, fees, etc. and configures the product’s granular details during implementation. All product nuances are handled with configuration – not customization.

• Product Configuration – Fees: Peach supports a multitude of fee structures, such as annual fees, purchase fees, draw fees, and late fees. Once configured, fees are automatically triggered upon an event, such as N days past due, foreign transaction purchase, etc., and are then calculated and applied to the line. Fees are configurable by state to meet local regulatory requirements based on the borrower’s residence.

• Event-driven system of record – real-time decisioning: Peach offers real-time ledgering, authorization, and logic management for real-time decisions like card swipe authorization at point of sale and repayment processing. We provide webhooks with message-oriented events related to status, payments, balances, purchases, disputes, and more for real-time, event-driven integration with your other business systems.

• System of record – payments: Our ledgers track granular balances at the line and draw level for accurate interest accruals, statementing, payment application, etc. in an auditable and explainable way. Product configurations include payment waterfall logic that defines balance repayment order at both the individual draw level and across multiple draws on the line. We also support dynamic repayment processing with hold day logic, and [Loan Replay] (/blog/what-is-loan-replay) for retroactive adjustments.

Managing lines of credit requires flexibility. Borrowers need changes, regulations shift, and unforeseen circumstances arise. Our system provides native, scalable logic – not customizations – to give lenders the ability to make on-demand modifications with automatic downstream processes for notifying the borrower, making past or future schedule adjustments, etc. Retroactive changes like purchase disputes, failed payments, chargebacks, etc. are executed automatically with our Loan Replay functionality. Peach replays each day of the loan’s history from the date of the applied change, reapplying the splits between transaction principal, interest, and fees; reaccruing daily interest on the updated principal balance; and recording the net adjustment to the line as part of the upcoming statement. This eliminates the need for manual engagement or external logic to reconcile adjustments, and enables lenders to remain flexible to servicing needs.

Peach empowers lenders to fully customize their line of credit products from a single, unified system. The configurations mentioned in this article are just a few of what Peach makes available to lenders – there are so many more supported within our 250+ options. Lenders can launch a single line of credit and quickly iterate to service additional options concurrently within the same system. In addition, lenders can continue to diversify their portfolio offerings on Peach by launching any number of new credit products. Dive into how to set up Line of Credit management within Peach in our technical guide.

Build once into Peach’s API-first infrastructure and scale in any direction.

Contact us today to learn more.