In just a handful of weeks, COVID-19 has shown that there’s no going back to pre-quarantine business models. And just as businesses prepare to reopen and brace for the “new normal,” lenders have a unique opportunity to adopt a new model now—and get ahead.
Traditional lending has long been fraught with hurdles—like requiring customers to book an appointment in advance or offering only in-person lending applications. Now, with in-person service a limited reality, lenders have the opportunity to introduce new processes and make their foray into digital small business lending.
One thing is becoming clear: offering digital channels is the key to longevity for lenders. The online arm of your business can persist through a crisis—and offer support for the small businesses that are faced with layoffs and piles of bills. Here’s what you need to know about the future of lending.
Digitizing the lending process
Borrowers want convenience. And in a time of crisis, they need it. In many cases, business owners need to get a loan decision in a matter of days—not three to five weeks. This need is so strong that 66% of Gen X and Boomer business owners and 76% of Millennial business owners would pay more for quicker service and shorter wait times.
Digitizing even part of your lending process—such as offering online application intake—can make loan products more accessible for small businesses. Small business owners can find your application through a quick Internet search and even apply via their phone. They can get a decision quickly and be on their way to financial relief in as little as 24 hours.
And just picture a few weeks or months down the road: when lending institutions start to reopen and extend their hours, borrowers will likely be cautious to be among the first in-person customers. By going online now, you’re setting your business up to stay essential long after the dust settles.
Minimizing risk, maximizing reward
Lending to small businesses is already perceived as risky. And when you add emerging technology, that risk is amplified. But as a recent report by McKinsey outlines, the key to help lenders and banks maximize their return securely is looking to fintech to build up the right infrastructure.
Building digital lending software from the ground up can take years. Look for a platform that enables you to automate burdensome manual tasks and evaluate small businesses with relevant, timely criteria.
Digital small business lending software can also help you keep more accurate records of repayment and ensure businesses are paying on time. (One caveat: if you happen to be in a position to defer repayments or extend a few-day grace period, your customers will certainly appreciate the goodwill.)
All in all, the outlook is bright for lenders and/or banks with digital operations. By expanding your real estate to the web, you’ll be better equipped to aid customers immediately and grow your business in the long term.