In 2005, when a young entrepreneur named Hamdi Ulukaya sought capital to buy an old yogurt factory, it may not have made sense on paper for a lending institution to approve his loan. As a small business owner, his existing cheese company was barely breaking even, had only 40 employees, and the factory for sale was being shut down by Kraft Foods, which wasn’t a ringing endorsement for the space—or the industry.
But, equipped with a business plan driven by his personal story of growing up on a dairy farm, he saw an opportunity—one which required money, and fast.
Today, Ulukaya’s company averages $2 billion in annual sales, and he remains the sole owner. Instead of relying on investors to grow the business into a household name, he has taken out bank loans and reinvested profits to scale its operations. Perhaps you even have some of his yogurt in your fridge right now,
That business is Chobani.
Understandably, many community banks are hesitant to lend to struggling small businesses. The ongoing uncertainty due to the pandemic means the future of many businesses is up in the air, and lenders are proceeding with caution: in November of 2020, small banks approved only 18.3% of business loan applications—a 32.3 point decrease from the same time in 2019. But who knows which fledging mom and pop shop will become the next Chobani?
As small banks begin to think about a post-PPP world that relies on lending the bank’s capital, rather than the government, transforming your lending operations today could help you approve a business like Chobani tomorrow. Digitizing your workflow is the key to building lasting relationships with small business owners, who simply don’t have time for lengthy, in-person meetings. And—providing that beacon for them amidst stress and economic uncertainty builds a valuable foundation for future business dealings down the line.
So many of the barriers that frequently prevent small businesses from being approved for loans are systemic—including cumbersome, paper-based application intake processes that don’t work for businesses owners working 9-5o-5 (and then some). Small businesses ought to have a lending process that is separate from larger companies. Automating the application process–and optimizing the data that you use for underwriting–can help level the playing field.
Implementing an all-in-one digital solution allows you to develop relationships in your community with small business owners profitably—and efficiently—for all parties involved. Digitizing your operations allows you to:
- Automate the loan origination process as much or as little as you want, so you can focus on building relationships directly rather than losing yourself in paperwork
- Streamline the application process for your customers with an online hub to upload required documents—and lessen the chance of error—all from the convenience of a smartphone
- Efficiently approve loans so that promising businesses can get their money—and start paying you back—fast
- Mitigate your risk by getting your money back via daily ACH rather than relying on larger monthly checks
Chobani continues to succeed because Ulukaya dedicated his operations to the customer experience, set up smart business practices at the outset, and strived to create the highest quality product possible—but without a cash infusion at the get-go, none of this would have been possible.