If your small business (SMB) lending operation is clinging to manual and paper-based processes, you’re leaving profit on the table. 

In today’s post-pandemic market, it is essential for lenders to adapt and innovate. This means both streamlining their workflows and transforming the way they interact with borrowers. At the intersection of this need for evolution and innovation is automation. 

As we continue to move deeper into the digital age, successful SMB lending will hinge on bidding farewell to archaic lending practices and embracing lending automation

In this article, we’ll explore how automation is revolutionizing the way small business lenders work,  including how new technology addresses the unique challenges faced by lenders in the current environment.

Let’s get started. 

Why Automation Matters

Data inaccuracies. Delayed decision-making. And many unhappy, underserved customers.

When small business lenders rely on manual processes, they open themselves up to a wide range of business, compliance, and reputational risks

Despite these liabilities, many SMB lenders are still hesitant to adopt a modern lending solution. Instead, they rely on old-school, manual input technologies (e.g. Excel) for collecting, sharing, and accessing data. Often, these tools are meant for personal productivity, and have a hard time overcoming business compliance requirements.

Enter lending automation—and automated lending platforms

By implementing a modern lending software to automate operations, small business lenders can overcome many of the pain points and risks associated with traditional lending, as well as save a significant amount of time for each stakeholder involved in the lending process. 

Let’s take a look at some of automation’s many benefits.

Streamlined Client Onboarding

To build a fruitful lending relationship with SMBs, nailing borrower onboarding is absolutely critical.

It all begins with gathering financial statements and relevant identification documents. It’s a task that can become particularly tedious when executed manually, leading to delays and, in turn, frustration for both lenders and borrowers.

Automation eliminates this issue.

A cloud-based lending software can make onboarding a breeze, as this technology allows for document management to occur directly within the platform. Automated checklists, when combined with borrower/lender portals, bring transparency to borrowers (i.e., they understand exactly what they need to provide) and empower lenders to keep track of all information, ensuring no critical detail goes unnoticed.

This eliminates the chaotic back-and-forth of emails or the outdated necessity of physically printing out and submitting documents. Every document submitted is digitally timestamped, stored, and can be accessed at any time by both the borrower and lender, creating a smooth, stress-free onboarding experience.

As a result, lending operations become less prone to errors, faster, and more efficient.

Faster (and More Accurate) Credit Evaluations

After client onboarding and document collection, the next vital step in SMB lending is loan underwriting.

In this stage, the risk analysis team reviews borrower information, analyzing it to determine creditworthiness and loan repayment capacity. For many lenders, underwriting continues to be a manual or semi-manual process that requires a significant amount of data reentry (leading to both errors and delays).

Automated underwriting fundamentally transforms the credit evaluation and rating process. 

With an automated lending platform, lenders can compute and process borrowers’ financial data with unparalleled speed and accuracy. This not only enables lenders to handle higher volumes of loan applications within a shorter timeframe, boosting operational efficiency, but it also dramatically enhances the overall customer experience by reducing waiting times.

As a bonus, automation means that there’s consistency and traceability when it comes to analyzing borrower data. This is a key advantage when audits come around: all the information and criteria is neatly presented within the platform.

And yet, the benefits of automation in credit evaluations extend beyond speed and efficiency. 

The true power of automation is unlocked when it allows lenders to reclaim valuable time previously lost in tedious manual tasks. This time can now be reinvested in a more focused and nuanced financial risk assessment.

By eliminating the need to sift through mountains of data (or rekey it) and freeing up resources, small business lenders can delve deeper into the critical aspects of each loan application, like assessing a borrower’s financial risk and their ability to repay their loan.

End-to-End Portfolio Management 

Streamlined portfolio management is an essential pillar of successful SMB lending

Typically, managing a diverse loan portfolio involves keeping track of multiple variables, stakeholders, and stages for each loan, an effort often resulting in bottlenecks and inefficiencies. This is particularly challenging for lenders relying on manual methods and fragmented systems, where data isn’t updated in real time and often scattered across disparate locations.

With the advent of automation, lenders can now experience end-to-end visibility over their loan portfolio, all in one centralized location. 

An automated lending platform offers a bird’s eye view of the entire loan process, allowing lenders to see at a glance the status of each application. Whether it’s in the initial application stage, underwriting, or closing, each loan’s progress can be tracked and managed efficiently.

For instance, if an application gets stalled due to missing documentation, most platforms can automatically notify both the lender and the borrower, thereby enabling quick course correction and progression of the loan process. Similarly, if an underwriting process is taking longer than anticipated, the system can flag this delay, allowing management to allocate resources where they’re most needed.

With real-time updates, lenders are empowered to make informed decisions promptly. 

Whether it’s identifying trends across the loan portfolio, spotting potential risks early, or finding opportunities for cross-selling or upselling, the power of automation can help small business lenders to be more proactive and responsive.

3 Lending Operations That SMB Lenders Can (and Should) Automate

Alright, now we know how automation can help supercharge lending operations.

But where can small business lenders apply automation?

Let’s go over some of the specific phases of the lending workflow where lending automation can help.

1. Loan Origination

At the onset of the lending process, borrowers submit their applications, setting in motion a sequence of events that either culminates in fund disbursement or application rejection. This phase, known as loan origination, involves a multitude of tasks and lenders can greatly benefit from automation.

In an automated system, lenders can readily tailor loan application forms to cater to the unique needs of borrowers, specific loan products, and prevailing regulatory standards. As a result, the application process becomes a smooth, digital experience for the borrowers, as they easily navigate online forms designed with user convenience in mind.

Also (and as previously mentioned above), with automation, the cumbersome process of adding and verifying bank details becomes a breeze. Borrowers can digitally input their bank information, which is then promptly accessed and assessed by the lenders, thereby fast-tracking the initial stages of credit evaluation.

But the power of automation in loan origination extends beyond these initial steps. 

Automation enables comprehensive and accurate borrower profiling. It leverages all available data to compile a complete and detailed customer profile that lenders can quickly access for review. The result is a seamless, efficient, and accurate workflow that forms the foundation for effective decision-making.

2. Underwriting and Risk Assessments 

Evaluating the potential risk that a borrower may pose is an intricate process, requiring small business lenders to engage in exhaustive research and data analysis. However, automation is transforming this process, rendering it more efficient and effective.

Automated underwriting on a modern lending platform means that the system will screen loan applications based on specific creditworthiness and risk parameters set by the lender, typically via AI, ML, or a decision engine.

These technologies can quickly identify trends and analyze historical data, providing a more comprehensive and swift evaluation than traditional manual methods. This gives small business lenders a competitive advantage as they make informed, data-driven decisions faster.

This streamlined approach returns a significant amount of time to lending stakeholders as it empowers them to focus the bulk of their manual review efforts on complex cases. Simple cases can be handled by the automated system (although the need for human oversight will always exist), thereby accelerating the evaluation process and increasing the volume of applications processed.

3. Loan Reporting

In the realm of SMB lending, robust reporting is indispensable. 

It not only guarantees regulatory compliance but also steers strategic planning and strengthens stakeholder relations. Despite its importance, the manual creation of reports (a labor-intensive task, often requiring dedicated personnel) persists.

Automating the loan reporting process revolutionizes this crucial function, enabling the generation of data-rich, custom reports swiftly and seamlessly. An automated lending platform undertakes this process by collating data, enforcing uniform formats, and standardizing calculations across various reports. This leads to consistent, accurate reporting that aligns with the unique workflow and compliance requirements of each small business lender.

One of the major benefits of automated loan reporting is its ability to extract and utilize real-time data. This ensures that reports include only the most up-to-date and precise information, enhancing the value of insights and lending decisions.

Important: remember that automation is not just about simplifying reporting—it’s about making reporting more insightful, strategic, and actionable.

Experience the Power of Lending Automation With SPARK

It’s time for small business lenders to break free from the “manual madness” and unlock the path to efficiency with automation. 

SPARK offers financial institutions an automated lending platform with smooth workflows, intelligent automation, and customizable features to more efficiently manage the entire lending process.

With SPARK, you can streamline tasks, configure notifications, and seamlessly integrate with other lending tools to help you make smarter decisions and strengthen your lending operation.

In a competitive industry, don’t settle for manual inefficiencies and repetitive actions. Instead, embrace automation and propel your lending operation towards greater profitability. 

Request a demo today to experience the transformative power of SPARK firsthand. 


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