can trustee decline making a second loan on grounds of creditworthiness? loan program does not say so specifically but allows trustee to consider creditworthiness.

Do you ask all applicants for a credit history and/or have their credit checked? If the policy says creditworthiness is a consideration in making the loan, then I think that means it would be a basis for denial if the credit is bad. But I think that you would need to make sure that you apply the same process to everyone.

i agree you must be consistant. actually the person defaulted on a prior loan. that is why is say creditworthiness is bad.

Why not just amend the loan policy to provide that additional loans will not be allowed if a participant previously defaulted on a loan? Then the trustee doesn't have to worry about making an arbitrary decision about creditworthiness.

i guess that can be done. however, the client has an aversion to amendments and additional participant notices (SMM's).

I am inlcined to agree that the 2nd loan can be denied. As long as you apply the principle consistently, I don't see why you can't rely on the general "creditworthiness" provision.