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3 ways to optimize your commercial lending department

Mar 21, 2017 Philip Burgess

3 ways to optimize your commercial lending department

What's the quickest way to assess a business credit applicant's creditworthiness? How can you ensure validity of the information you have at your disposal? How can you reduce the time associated with the loan approval process?

All of the questions revolve around optimizing your commercial lending operations. Here are three ways you can achieve this goal. 

1. Automatically copy documents to a compliance system 

Regulations often introduce additional costs, causing many financial institutions to refrain from pursuing other business ventures.

For instance, HousingWire commented on a client note from Kroll Bond Rating Agency, which found most commercial lenders pulled out of the residential mortgage space in early 2015, citing high compliance costs as one of the leading causes. 

Audits distract your staff from focusing on identifying low-risk, high-return business loans, forcing them to spend time digging up documents on previous agreements or open accounts. To resolve this problem, introduce a system that automatically copies and stores documentation associated with loans throughout the approval process. This reduces the disruption compliance obligations often introduce. 

2. Streamline business credit report collection 

Find a business credit reporting solution that connects directly to your loan approval system. What this does is centralize information, making it easier for staff to find data when underwriting the application. Also, it makes processing a whole lot easier. Switching from one program to another to view different information increases the amount of time loan officers need to complete work.

You can connect business credit reporting data to your loan approval software by utilizing APIs, but some reporting applications may not have that technology. Look for those that do, as it can save your business money on custom development. 

In addition, ensure business credit reports provide the following information:

  • The owner and operator's personal credit history. 
  • Equipment financing data.
  • Business payback details.
  • Lien and judgment summaries

Identifying data such as addresses and phone numbers is also a must, as it enables your loan officers to confirm they're conducting assessments of the appropriate businesses. 

3. Implement technology that complements optimal workflows

Every department within your business follows specific procedures to complete day-to-day tasks. In commercial lending, such tasks include developing term sheets, conducting due diligence analyses and other steps throughout the loan approval process.

The technology at a loan officer's disposal largely dictates how quickly and effectively he can approve or deny applications. With respect to this issue, the business credentialing software and other systems your loan officers use must either complement existing process or introduce optimal workflows. 

By "optimal" workflows, we're referring to the most cost-effective processes available to your talent. For example, upon rolling out a new commercial loan approval solution, the technology may adjust how loan officers collect income statements, analyze industry trends, review financial statements and so forth. If these adjustments reduce the average amount of time, manpower and resources needed to complete those and other tasks, the new application has optimized your company's workflow. 

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