Streamline small-business lending with software

Used correctly, software can make the lending process faster and more secure—and be a selling point as your community bank searches for new small-business customers.

By William Atkinson

More and more, community banks are relying on software for their business processes, including small-business lending.

“Historically, most business lending has been fragmented, rather than a homogeneous process across the capital market spectrum,” says Barry Sloane, president and CEO of Newtek Business Services in Lake Success, N.Y. “This has made it difficult for community banks that are lending in their region, without large volume, to compete against the major money-center banks that might be in their market.” Software can help to remedy that.

As Sloane sees it, two of the biggest benefits of software for small-business lending are expediency and security. If managed correctly, these features interact with and strengthen each other. “Software makes it easier for community banks to make loans to customers expeditiously,” he says.

And, by using software, particularly as it relates to loan aggregation and documentation, security can be assured. For example, software can use file sharing, which enables loan-related documents to be uploaded into a secure environment. And with the use of e-signatures, confidential papers don’t need to be passed around by hand. “In a password-protected file share environment, business owners can provide their attorneys, accountants and controllers with access to the files simultaneously, allowing them to collaborate on the process,” says Sloane. “This not only keeps the process secure but also expedites it, allowing the bank to process loans more quickly. This improves the borrower’s experience both in terms of expediency and security.”

Speedy lending
According to Kyle Kehoe, president of the ACTion division of CRIF Lending Solutions, based in Atlanta, the biggest benefit for community banks in using software for small-business lending is faster response times for loan applicants. “Today’s business owners need speed and convenience,” he says. “The traditional workflow process of processing a small-business loan through the commercial lending department is cumbersome and slow.” Software that is specific to business lending can also help remove friction in the lending process.

“Additional benefits include protection of data, such as tax identification numbers and proprietary data that are used in the application process,” Kehoe says. He notes that the ability to apply for a loan remotely via mobile and online channels is another sizable benefit.

Paperless lending is a growing movement in the lending software business, Kehoe says.

“The amount of documentation and data required for a small-business applicant is much larger than for a consumer applicant,” he says. Lending software that allows you to interface with paperless solutions like e-signature, integration to data warehouses, and code banking software that holds an applicant’s account data is one big step toward addressing this challenge.


William Atkinson is a writer in Illinois.

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