How to Improve your Business Loan Origination Process
Procedures for business loan origination can be sticky and time-consuming, which is frustrating for both you (when you’re the lender) and the client (the business owner). If you can speed up this process and remove some of the hiccups, your own business will inevitably grow.
The Problems of a Clunky Loan Origination Process
As long as lending has been around, the industry has been burdened by cumbersome loan origination. Such friction is more than just a source of frustration – it’s a serious concern that can hurt business and prevent you from meeting the milestones you need to continue growing.
To be specific, loan origination processes may often result in inefficiencies that include:
- Too much paper. Clunky loan processes often rely on paper. But did you know the average loan application generates several hundred printed pages? And that paper is one of the primary conduits for defects in the loan origin process?
- Poor borrower experience. When the process is ponderously slow, it creates an unpleasant borrower experience. Borrowers get frustrated and turned off. This may drive them to more efficient lenders and digital solutions that have managed to streamline their process.
- Wasted time. There’s often an over-reliance on manual data entry. Not only does this waste your employees’ time, but it’s also one of the most detested tasks a worker has on his or her to-do list. That makes it a serious source of frustration.
When you add up such inefficiencies, the true cost of a clunky loan origination process becomes clearer. It also indicates just how critical it is to streamline the process.
Tips for Streamlining the Loan Origination Process
Trimming your loan origination process will entail identifying and eliminating snags, and automating as many of the traditionally manual steps as you can. Here are several suggestions:
- Choose the Right Technology
It’s probably time to upgrade your tech and take advantage of the newest digital solutions. If it’s been several years since you’ve done this, you might be shocked by how much more efficient these new business lending tools are.
SPARK is a great example. This transformational digital solution is designed specifically for business lending in your community. It eliminates many of the complex and outdated lending processes that have long held operations back.
SPARK does three things specifically well: (1) Automate lead capture, (2) Streamline screening, and (3) Facilitate transparent underwriting. The result is a smooth process that makes everyone (from your team to the client) happier.
Obviously other loan origination technologies are out there, but this just gives you one example of how far the industry has come as a whole. The tech from five years ago can’t hold a candle to what’s out there today.
- Train Your Team Well
It’s not enough to have great technology. You must train your team to master the technology so you’re fully able to utilize each and every element that’s available.
Training can’t be treated as a one-time affair that employees participate in as part of the onboarding process. It has to be a continuing element of employee development and growth. This will lead to greater productivity in all facets of the business (including loan origination).
- Maintain a 360-Degree View
Isolated vantage points are dangerous in the due diligence and underwriting process. If you start viewing the borrower through siloed data sources, things can get dicey in a heartbeat.
A 360-degree view is a must. “Choosing a comprehensive technological solution allows you to fully leverage the integrations, analysis, and streamlined workflows available so you can cut down on the time it takes to fund a loan,” Proformance explains.
“Streamlined borrower analysis can improve your customer service by approving a loan in one-third less than it would normally take you.”
- Perfect the Pre-Qualification Process
You can avoid many of the pitfalls in the loan origination process if you’re willing to spend more time perfecting the pre-qualification portion. The more accurate your pre-qualification is, the less likely you’ll have unqualified borrowers sneak into the picture. This will save you time and prevent unnecessary frustration on the part of the borrower.
Give Your Business a Boost
It’s time to stop holding your business back from growth with unnecessarily cumbersome loan origination processes. If you can streamline each phase, you will speed up the process, lower overhead, and get superior results.