For community banks, fintech lenders, credit unions, and other financial institutions that specialize in commercial lending, automated loan origination software has the potential to transform business loan processing. Using a single platform that offers full functionality commercial lenders can fully automate the loan origination, underwriting, funding, and loan servicing aspects of small business lending, commercial real estate loans. The result is a streamlined workflow that:

  • Improves accuracy
  • Minimizes credit risk
  • Simplifies regulatory compliance
  • Makes relationship management a breeze
  • Shortens turnaround times
  • Enhances the customer experience
  • Inspires customer loyalty

A lending solution that covers you fully through the lifecycle of each loan delivers tremendous value. But lending platforms vary—and not just when it comes to pricing. How can you judge which lending platform will best suit your loan portfolio and your budget?  The digitalization of the lending process offers many opportunities to streamline your commercial banking business and become more agile and profitable. But it’s important to look under the hood of each loan origination system you’re considering to find the best loan origination solution for your financial services organization. So we’ve put together a list of questions you should ask when comparing commercial lending software options.

Question #1: Does the loan origination system simplify your entire commercial lending process?

It’s time to examine your unique loan origination process from end to end. Make a list of all the tasks you perform, from onboarding to credit decisioning to nurturing customer relationships. Make sure any platform you’re considering succeeds in enhancing each step of your loan origination process. It should simplify the loan application process, document management, underwriting, credit-decisioning, and more. Take a hard look at the features the platform offers to be sure it will support each of your needs. Will it make you a better, more competitive small and midsized enterprise (SME) lender?

Question #2: Is the platform configurable?

You’ve been running your business for quite some time. Along the way, you’ve relied on multiple software programs to achieve your goals. The data you’ve amassed is priceless. Your CRM system is critical to your efficiency, for example. The right commercial loan origination system for you will integrate with your legacy systems and provide easy access to your existing databases. It won’t disrupt policies that are working for you. It will seamlessly reflect your policies and the brand that attracted borrowers to you company in the first place.

Bear in mind, configuring isn’t the same as customizing. Configuring is something you can do on your own, as many times as you need to, with minimal support and, perhaps more importantly, zero expense. Take the time to question solution providers. Make sure you fully understand how much flexibility is included “standard” and what’s an “add on” that will cost you more time and money.

Question #3: Will the platform cover you and function across your entire loan portfolio?

Banks and fintech lenders offer a range of products. Make sure any loan origination software you’re considering can support all sectors of your business and affords you the option of offering new products down the road. A commercial lending platform’s ability to scale with your business quickly and easily will hold the door open to growth. You may be offering equipment loans and business lines of credit today. But your next big opportunity could be in commercial real estate financing. It’s easier to attract repeat customers when you have the capabilities they need to support them as they grow.

Question #4: What can the lending platform do to enhance your customer experience?

The ideal loan origination solution comes close to being frictionless. In other words, it doesn’t ever rub your customers the wrong way. Consider what borrows value most when comparing lending solutions. Speed is a top priority for customers. So find out how long it takes for customers to complete a loan application. Can they track the progress of their loans in real-time? Customers want to be kept in the loop all through the underwriting and credit-decisioning stages of the lending process. They want to be able to upload supporting documents like magic. And just like lenders, borrowers don’t like surprises. A commercial lending platform should duly educate borrowers about the loan covenants they’re agreeing to.

Question #5: Does the platform deliver best-in-class risk management?

You can’t be profitable without accurate credit-decisioning. And the more accurate your decisions are, the more profitable you can be. Your business loan origination software should support a profitable underwriting process for your institution.

The best commercial loan origination products draw data from a wide range of sources, including traditional and alternative credit bureaus, bank records, and tax returns. From identity and income verifications to reliable collateral valuations, they cover all the bases. And by doing so, they can set the stage for accurate automatic approvals and other time- and labor-saving tools.

Question #6: How long will it take to implement your new loan origination software?

Installing any new system is bound to be a little bit disruptive to your business. But some implementations are easier and less time-consuming than others. When you’re comparing loan origination platforms, be sure you question each provider how long it will take for you to get up and running with their platforms. It takes about 45 days to get up and running with Biz2X’s base platform, but many other systems take longer to implement.

It’s a good idea to find out if or when any of your existing systems will be unavailable over the course of installation. Get a firm idea of who in your organization will be required to participate in the implementation and how much time each of them will be required to commit to the project. Take the time to prepare all stakeholders for the transition and get their buy-in to ensure a smooth experience.

Question #7: How long will it take to see a return on your investment?

Commercial loan origination software platforms vary in cost. Pricing is typically based on a one-time implementation fee and ongoing subscription fees based on the number of platform users. For example, cloud-based solutions may have ongoing technology or hosting costs you should account for, but on-premises solutions typically have very high installation and maintenance costs due to the nature of the technology.

You will gain efficiencies and see higher profit margins once you’re up and running on a platform because you’ll be able to process loans more quickly and price them more accurately. But the question remains—how soon will you break even on your upfront investment? What will be your ROI on your monthly subscription costs?

Lending platform providers should be able to predict your break-even point based on your loan volume and the data they’ve collected from other customers over time.

Get Started with Loan Origination Solutions

Ask each platform provider you are considering these key questions and you’ll be on the path to making an informed platform decision. Plus, you will have ample evidence to support your business case when you present to your executive team about the opportunity for bringing in a loan origination platform. If you want to go even deeper, check out our free ebook about assessing lending platforms: How to Evaluate Business Lending Software