A fast “no” is better than a slow one. Business owners, like the rest of us, would rather know quickly whether the sale, customer, or contract is theirs and not be kept dangling for days or weeks. This is especially true when it comes to the small business loan application process. It’s more than just a general sentiment—according to a Wells Fargo study, 76% of small business owners will pay more for financial products and services to help them better run their businesses. For small business owner-operators who wear multiple hats, efficiency rules—even over cost. As you examine your bank’s small business lending operations, prioritizing decision speed is key to tapping into this giant market. And in today’s world, speed is increasingly dependent on one thing: automation.
Historically, banking has lagged behind other industries in adopting new technologies. According to a 2018 survey by the American Bankers Association, only 26% of banks use some form of digital loan origination channel for small business lending, creating a hurdle for the most-time crunched of business managers: the small business owner. Here are four of the most time-consuming aspects of the loan application process that small business owners face, and how you can use technology to deliver a faster decision.
- Establish digital loan origination channels
Banking is traditionally driven by branches, relationships, and face-to-face contact. While in previous decades this was a strength, in the digital age—and as Millennials continue to rise in the business ranks—the in-person process is becoming more of a barrier than a bonus, especially for small business owners short on time (which means just about all of them). A Harvard Business Review article published in 2017 suggests that over 60% of small business owners would prefer to apply for loans entirely online, and Millennials will pay more to avoid ever having to speak to a person. Yet, a Bain report found that only 8% of bank small business loan applications were submitted online, and only 0.1% were handled digitally from end-to-end.
The good news? With technology that’s customized to your rules and preferences, you can capitalize on this opportunity. Digital loan origination channels make it easy for small business loan applicants and your lending managers. Automate your entire workflow and shrink your small business lending process from weeks to days, hours, or minutes, and watch your small business lending multiply.
- Enable auto-approvals—and rejections
The number of viable small business loan candidates is plentiful. Unfortunately, not all are getting the loans they need. In turn, your bank is not maximizing the use of its cash. Your goal is to separate the profitable from the unsustainable. With digital loan origination channels for small business lending, you can set up auto-approvals and auto-rejections based on your bank’s specific rules—e.g. credit score minimums, business ratings, or other criteria—so that you can focus your loan officers’ attention on larger businesses. Along with leveraging your bank’s standard loan data and predictive analytics, digitized technology also gives you the ability to integrate additional requirements and metrics that align with your bank’s preferences. By enabling auto rejections and approvals, you save your loan officers time and give your small business loan applicants fast decisions.
- Offer digital document uploading
According to a 2017 report from Oliver Wyman and Fundera, nearly all borrowers under the age of 35 express a preference for submitting documents online. But despite this clear business benefit, only 12% of banks support digitized document uploads.
By giving applicants the capability to digitally upload their documents, you save them from having to fax, mail, or physically bring their documents in. Documentation can be gathered, submitted, and reviewed in a fraction of the time, thereby speeding up the entire application process. Meet your clients’ expectations for fast service and easy process, while freeing up your loan officers’ time to service larger, commercial loan prospects.
- Allow e-signing of loan agreements
E-signature options are offered for everything from employment contracts to sales agreements. Yet, only 11% of banks support the e-signing of loan agreements. This technology is finally available for small banks and credit unions. As with digital document uploading, by enabling e-signing, small business owners don’t have to carve out precious time to fax, mail, or hand-deliver their loan applications. Moreover, e-signing catches any missed signatures—your loan officers no longer have to contact an applicant about a missed signature. Fewer manual steps for everyone, and one giant leap of progress for you.