What are the first words that come to mind when you think of your institution’s small business loan origination process? If you’re a loan officer who’s still processing loans manually, you might have come up with “slow.” Or “cumbersome.” Or even “frustrating.” That’s why so many small business lenders, from global institutions to regional or community banks, have made the switch to using dedicated loan origination software.

The trend is pervasive in both the consumer and commercial loan markets. Though the specifics will vary by type of loan, the best digital lending platforms have several things in common. They streamline workflows and speed up the underwriting process for lenders, improving borrowers’ satisfaction and building brand loyalty along the way. And they allow financial institutions to process more applications more quickly and accurately. Automation offers a level of efficiency that has a direct effect on a lender’s bottom line.

So, what makes the best business lending platforms tick? We’ll answer this question from a banker’s perspective in this article.

Automation streamlines every loan processing task

The best small business lending solutions offer benefits at each major step of loan origination. These platforms:

Allow your financial institution to customize qualification rules and build a decision-making engine that enforces them.

-They make onboarding and application intake easier for lenders and borrowers alike.
-They provide an easy-to-use dashboard that integrates all steps of the small business lending process.
-They automate underwriting, assuring compliance with KYC and AML regulations in the process.
-They streamline the final approval stage of loan processing, including loan disbursal.
-They seamlessly transition to lenders’ core loan servicing platforms.
Let’s look more closely at the features that loan origination systems offer to help loan officers perform their jobs with greater ease, confidence, and accuracy.

The seven features the best business loan origination software delivers

Loan process digitalization makes a positive impact at every step along the way to making a small business loan. It’s tough to overstate how implementing customized loan origination software can transform your business. You’re already familiar with the tasks it takes to take a loan from application to funding to servicing. Read on to learn how a loan origination platform influences and brings more accuracy and efficiency to each of the steps in the lending process from start to finish.

Customizing qualification rules

Every financial institution and every borrower is different. Your bank’s focus may be broad or narrow. If you’re a community bank, for example, you might have defined your niche by the size of business you prefer to lend to, from start-ups to midsized companies. You may want to concentrate on a particular industry, such as the one that drives the economy in your local market, or emphasize lending to non-profit organizations your community relies on. Chances are, you’ll have different qualification standards for each type of borrower, such as different credit scores and income thresholds. What’s more, as your business changes and grows, the scalability of your commercial lending software may be vital to reaching your strategic goals.

The best digital lending solutions offer loan providers the flexibility to set their own rules—and change them—as their business needs or range of financial products shifts. They allow you to customize your commercial loan prequalification standards, institute pre-determined auto knockouts and configure instant validations as you see fit.

When your financial institution uses digital lending software, you can set up either automatic or semi-automatic loan approvals. Loan origination software also helps you institute risk-based pricing to maximize the profitability of each loan you write. And all of the features the platforms offer are configurable across multiple loan products, from SBA lending and commercial mortgages to working capital loans and business lines of credit. As you increase the number of loan types you offer, your loan origination software can grow with you.

Onboarding and application intake

Is your financial institution still processing loan applications manually? Loan officers who operate without automation often describe the lending process as nightmarish. From bank statements to credit bureau reports to tax returns, their desks are overwhelmed by difficult-to-organize folders filled with loan documents. And borrowers may feel the same pain. It’s time-consuming and confusing to gather the paperwork they need to complete a loan application. It’s frustrating for them to submit documents, then wait for days to hear from their loan officers with a decision.

But loan origination software offers an antidote to customer pain. The best platforms include a customer-friendly branded portal for document upload. That simple functionality goes a long way towards minimizing borrower frustration and building goodwill for your business. Customer portals keep borrowers on task as they move through the sequence of steps they must take to apply for a loan. A well-built customer portal can also save loan officers hours of playing phone tag and writing one-off emails as they try to keep borrowers on track.

A Comprehensive Dashboard Organizes All Lending Tasks

The small business lending process is comprised of dozens of small chores and even more bits of discrete data. Loan officers who process loans manually may find it challenging to organize the resources they need to take a loan from initial application to final funding.

The best loan origination platforms include a single, intuitive hub to keep them organized and make all data accessible in real-time. They include a customer communication module that makes corresponding with customers fast, easy, and consistent, too.

Advanced Digital Underwriting Tools

The small business lending process poses several potential bottlenecks. The underwriting stage of loan processing is particularly vulnerable to slow-downs. Without automated loan origination software, underwriting a commercial loan can take weeks. With it, underwriting can be completed in a few days or even close to instantaneously. The news may be good or bad for a borrower, but it’s always good news when an underwriter can make quick work of one loan and move on to more business.

By some reports, new AML laws introduced in 2016 increased the time it takes to onboard customers by over 20%. But fail to meet AML requirements at your own risk. Billions of dollars in fines are levied against institutions that don’t follow the law, and for good reason. That’s one more reason why digital solutions make sense: the legal requirements are built into commercial loan origination platforms from day one. It minimizes regulatory risks for your lending institution.

Some small business lending platforms take automated underwriting further than others. In addition to gathering income statements, bank records, and third-party data in real-time, the most advanced platforms may also gather information based on borrowers’ online activity, such as their search behavior, social media posts, and purchase history. When you’re lending to a small business owner, too much extravagant spending can be a red flag. Underwriters can infer risk based on the intelligence such data provides.

A workflow that streamlines loan decisioning

By automating decision-making, loan origination software shaves days—and often weeks—off the lending process.

Digital lending software gives customers the answers they want in short order. The truth is, even customers who are turned down for a loan appreciate quick decisions. A quick thumbs down gives borrowers the opportunity to pursue alternate funding options.

And once again, it frees loan officers and underwriters to move quickly to the next project. Financial services companies that provide their staff with loan origination software can earn more money and keep their employees happier. Those who don’t provide it are at greater risk for employee attrition. That’s another way the technology can make you more competitive and profitable. Training new employees is expensive, after all.

As you’re considering different commercial lending software, look for other time-saving features. Some platforms automatically issue credit memos and populate terms and conditions documents with personalized information on each client, for example. And look for flexibility: your loan origination software should give you the option of automating—or not automating—each step of the lending process as your institution requires. You should be able to use the features of your system on your terms, to suit your customer relationship management strategy.

Features after loan origination

A lender’s responsibilities don’t stop at the point of loan disbursal. Sending statements, collecting principal and interest payments, processing any tax and insurance statements, putting funds in escrow, and resolving delinquencies are all part of the loan servicing process. At the end of the funding process, the best digital lending platforms integrate easily with the CRM system you’re using for loan servicing. This should make it easy to onboard these loans to your core banking platform and ensure that everything remains fully compliant and completely accurate.

How to pick the best business loan origination software

Without automation, financial institutions may find themselves at a serious competitive disadvantage. The commercial lending industry has gone through what can only be called a sea change. New competition has entered the market, especially these days from technology companies—who can outpace traditional community banks and credit unions and deliver a more rapid commercial loan experience.

Loan origination software is a critical tool that can transform you into a turnkey lender and help you meet the challenge of a changing industry. So use the features that we’ve covered above to evaluate your options for a loan origination system designed for business lending, and you’ll have your institution on the way to a stronger, digitally-enabled lending business in no time.