Program lending, also known as policy-based lending, formula-based lending, or checklist lending, refers to loans issued based on pre-set criteria or guidelines. These help lenders make quicker decisions and process large volumes of enquiries efficiently.
Often, a loan broker might claim they can negotiate a better interest rate for you. But under the “straightforward” nature of program lending, most borrowers will simply find that different banks offer different rates — and the real way to secure a cheaper loan is by comparing across lenders.
Today, many lenders use machine scoring to assess creditworthiness, eliminating the possibility of negotiation altogether. After all, if every deal could be negotiated, the cost of underwriting would rise — and that could ultimately drive up borrowing costs for everyone.
By contrast, discretionary lending allows for a more tailored and flexible approach. Lenders evaluate not only the numbers but also the borrower's business model, growth plans, and broader financial strategy. Because of the time and manpower involved, this method is usually reserved for very large loan amounts, typically for big corporations or high-net-worth individuals.
Discretionary lending often involves a back-and-forth process over multiple loan terms — not just the loan quantum or interest rate. These negotiations are typically handled by someone at the C-level, like a CFO, and rarely by a loan broker who may not be involved in the day-to-day operations or have deep knowledge of the borrower’s financial position.
A borrower under discretionary lending often has a long-standing relationship with their primary bank. This gives the bank richer insights into the borrower’s history, allowing them to assess applications differently — and making it less advantageous to shop around.
There is no strict line separating program lending from discretionary lending. Some relationship managers may use the term "discretionary" loosely, depending on internal policies and loan structure.
Whether you're applying under program or discretionary lending structures, FindTheLoan.com helps you compare offers easily across multiple lenders — all in one place.