In an industry like small business (SMB) lending, it’s easy to fall into the trap of thinking about user experience in the short term.

Does the onboarding process really need to be optimized? After all, the borrower just needs to get their money and then move on with their business, right?

Some lenders may see it that way, but the role that first impressions and smooth onboarding play in a profitable and sustainable lending relationship shouldn’t be downplayed.

That first interaction is your chance to establish trust, ensure regulatory compliance, and open the door to a mutually beneficial relationship. 

In this article, we’ll cover why an excellent onboarding experience is vital to your SMB lending success, as well as offer strategies to improve yours.

Traditional Borrower Onboarding Is a Mess

A Moody’s Analytics poll asked commercial lending stakeholders what their biggest challenge was in initiating the loan process. 

The response?

A staggering 56% of bankers pinpointed manual data collection and interactions with loan applicants as the most significant hurdle they face.

This response illuminates a broader issue within the lending industry: the persisting reliance on antiquated, labor-intensive practices that are not only time-consuming, but also fraught with potential for human error.

The same survey reveals hesitance in adopting technology: a full 50% of bankers disclosed that they hadn’t incorporated any form of automation tools in their lending workflow. 

For those on the lending frontlines, onboarding borrowers without the proper lending software is akin to navigating a labyrinth—a bewildering road of manual procedures, repetitive documentation, and spreadsheets that are all too susceptible to inaccuracies.

Borrower onboarding is screaming out for innovation and optimization.

Even in instances where the loan application process has ostensibly moved online, the reality is that it often remains shackled to outdated onboarding practices. 

In many cases, the process still requires submitting physical paperwork and extensive manual intervention from bank back-office teams.

This not only slows down the entire process but also opens the door to potential errors and inconsistencies, which negatively impact the borrower experience and a lender’s operational efficiency (and bottom line).

Benefits of Seamless Borrower Onboarding

Modern lending software offers a great deal of benefits across the entire borrower experience—starting with the onboarding stage.

Providing a seamless and intuitive borrower experience directly correlates with increased customer satisfaction, as users are quick to appreciate a user-friendly interface. Ultimately, a great experience leads to repeat customers and recommendations within their network.

Operational efficiency is another notable advantage. SaaS lending platforms like SPARK enhance productivity by reducing origination time and increasing the volume of loans that can be handled, all without the need for additional staff.

Employees spend less time working on repetitive, time-consuming tasks, such as manually copying information from documents—technology handles these mundane tasks. Instead, employees can spend more time talking to applicants to understand their stories, and ultimately make better informed decisions.

In terms of borrower retention, optimizing the onboarding process is crucial. A study showed that almost 70% of consumers abandoned the application process in 2022. A smoother, friendlier system not only helps retain these individuals, but also fosters trust and goodwill, pivotal for securing repeat business and encouraging word-of-mouth referrals.

Compliance, often a daunting (and recurring) aspect of lending, is simplified in SaaS lending platforms through automation. Instead of depending on staff to memorize and meticulously follow every rule, lending software can consistently apply procedures across all loans, guaranteeing that they are all handled in the same, compliant way. 

In addition, when running to demonstrate compliance for a specific loan, lending platforms can produce necessary documentation effortlessly. Time, headaches, and human error are mitigated all at once.

Ultimately, the cumulative effect of digital automation and an enhanced borrower experience is the acceleration of revenue streams. 

5 Onboarding Best Practices to Improve Borrower Experience

While building our SaaS lending platform, we’ve learned what works first-hand—it’s only fair that we share that knowledge with you, to ensure that your SMB lending business offers an exceptional borrower experience.

Here are the five major pillars you should put into place to create a better onboarding experience.

1. Define Success and Key Performance Indicators (KPIs)

If you’re going to reform your onboarding process, you need to have a guiding objective in mind.

It could sound something like “reduce application abandonment by 15%,” achieve a net promoter score of 9 for our onboarding process,” or anything that your business will focus on. 

Next, list the metrics for measuring progress toward that goal.

Sample metrics include time to first loan disbursement, application completion rate, applicant support requests, product/feature adoption, and lifetime value. 

2. Understand What’s Important to Borrowers

Step into the shoes of an average consumer and walk through the application process from their standpoint.

Watch people complete the application in real-time (with their permission).

You can also conduct market research, competitive analysis, and customer surveys.

These tools will help you optimize your lending process, as you leverage the data you gather to work towards fulfilling consumer wants and needs.

3. Personalize the Experience

Creating a personalized lending experience for borrowers is the key to earning their trust and loyalty.

SPARK’s platform makes it easy to demonstrate a level of care that makes borrowers feel looked after. You must leverage data, technology, and humanity if you want to deliver a memorable  borrower experience.

4. Get Your Team on the Same Page

Sometimes, an onboarding experience is disjointed because an organization isn’t aligned on what matters.

Each department handles separate pieces without visibility of what the next team is doing—instead of buying into a unified, seamless experience for the borrower.

Team training and regular interdepartmental updates can help everyone focus on the big vision instead of getting lost in minutiae. Remember: build bridges among your teams, and avoid silos.

5. Leverage Technology to Improve the Onboarding Process

Manual lending processes can never match the borrower experience offered by modern technology. Without the proper automation, there are too many moving pieces and too many opportunities for things to go wrong. 

Document collection is one of the most important components of a loan application. It should be straightforward, consistent, and free from guesswork for borrowers and loan officers alike. 

SPARK’s SaaS lending platform provides a modular framework that can be customized to your organization’s needs:

  • Automated checklists: generate an onboarding checklist for each new borrower based on their profile. Collect all necessary documents every time and never lose sleep wondering if you missed something. 
  • Structured document management: as documents come in, the files are renamed and organized methodically, allowing you to build a diverse portfolio without losing track of anything. 
  • Document tracking: activity logs show who uploaded each document, tracking expiration dates and signature verification. You can easily find documents, and you have complete visibility into the collection process and current status of each borrower. 

Incorporating SPARK’s SaaS lending platform into your operations transforms the tedious task of managing onboarding documents into a streamlined, error-free process, ensuring that every document is accounted for, meticulously organized, and easily traceable. 

SPARK: Streamline Your SMB Lending Operation 

Walking borrowers through an SMB loan can be tedious and complicated.

The first contact a borrower has with you marks what the relationship will look like along the way. That’s why onboarding is essential: right from the start, you need to show that they come first, and offer them a memorable borrower experience.

SPARK’s lending software takes this arduous process and makes it easy and transparent for you, and your borrowers.

Eliminate anxiety for borrowers and remove the pain of shuffling papers for your team.

Schedule a demo to see for yourself what SPARK can do for your SMB lending business.


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