> For the complete documentation index, see [llms.txt](https://docs.trilobyte.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.trilobyte.finance/overview/how-underwriting-works.md).

# How Underwriting Works

Underwriting is the heart of Trilobyte. Before a loan is ever created, a **Pool Manager** assesses the borrower and decides whether to lend, how much, and on what terms. Unlike crypto lending that only asks *"what assets do you already hold?"*, Trilobyte underwrites on the **real economy** — a business's actual cash flow and, where applicable, real-world assets pledged as collateral.

## Underwritten on verified cash flow

The foundation of a Trilobyte assessment is **real, verifiable revenue** — not self-reported numbers.

A borrower connects a **trusted source of their cash flow** — for example a payment processor, merchant account, or accounting system. Trilobyte reads the borrower's incoming payment history directly from that source, so the loan is underwritten on what the business **actually earns**, not on figures typed into a form.

{% hint style="info" %}
Cash-flow sources are **pluggable**. A borrower can connect different kinds of verified revenue data; the underwriting methodology is the same regardless of the source.
{% endhint %}

This is what lets Trilobyte serve creditworthy businesses that traditional lenders turn away for lacking conventional collateral or a long credit file — their **payment history is the evidence**.

## The methodology — the Five C's of credit

Trilobyte's risk assessment follows the long-established **Five C's of credit**, the same framework professional lenders have used for decades:

* **Capacity** — Can the business afford the loan? Driven by the connected cash-flow data (revenue level, trend, stability, and debt-service coverage).
* **Capital** — The financial health of the business (its own stake versus its existing obligations).
* **Collateral** — What backs the loan if it isn't repaid (the manager's stake, and any real-world asset the borrower pledges).
* **Character** — The borrower's track record and reliability.
* **Conditions** — The market and sector the business operates in.

Each factor contributes to a single, transparent **risk grade**.

## Data-driven, with professional judgment

Trilobyte blends two inputs:

* **Auto-derived from connected data** — factors the cash-flow source can prove directly, such as average revenue, revenue trend, income stability, and how comfortably the business's cash flow covers the proposed repayments.
* **The manager's professional assessment** — factors that come from documents, references, or the manager's own diligence (balance-sheet health, repayment history, pledged collateral).

The data leads where it has signal; the manager fills in what the data can't see. The two are **additive** — a manager's input never overrides what the verified data shows.

## Affordability comes first

A loan must **fit the borrower's cash flow**. Trilobyte's underwriting requires that a business's verified income comfortably covers the repayments before a manager approves a loan — so a borrower is never lent more than they can realistically service, no matter how strong the rest of the profile looks.

## Skin in the game

Underwriting isn't just an opinion. Every Pool Manager **stakes their own capital** as collateral against the loans they originate. If a loan defaults, the manager's stake is at risk first — aligning the underwriter's incentives directly with investors'.

## Transparent terms, private model

Every loan's **terms — amount, rate, and repayment schedule — are recorded on-chain** for investors to verify before they fund it. Those terms are set by this documented assessment rather than a black box, so investors lend against a clear, methodology-driven grade.

What stays proprietary is the **exact model** a manager uses — the specific weightings, thresholds, and scoring logic are part of an underwriter's edge, just as they are at any lender. Trilobyte standardises the *framework* and the *transparency*, while leaving the *judgment* to professionals.