Automating loan decisions for small businesses
It’s no secret that small business loans historically offer small profit; in fact, there is little economic difference in funding a $100,000 loan versus a $1 million loan. However, even though these loans may not always be the biggest movers to a bank’s bottom line, this type of lending is essential to establishing and building lasting relationships with small businesses.
So, how do banks make these small business loans not only a strong relationship-building tool, but also more beneficial to the bottom line without sacrificing quality? The answer lies in process improvement. The common manual method of approving and processing loans takes an inordinate amount of time and manpower, therefore driving up cost and decreasing margins. Not only is the process slow and complex for the lender, but it typically leaves the small business owner confused and frustrated.
Banks must transform this process and utilize automation during the decision-making stage. Consumers trust banks because they’re proven; their credit policies have stood the test of time and have served thousands of individuals and businesses. If banks automatically run loans against this existing, established lending policy, they can take a risk they understand. And because automation will allow the bank to process more loans more quickly, process time and overhead costs will be reduced, ultimately making the loans more profitable.continue reading »