Common avoidable delays in the commercial loan process
Your member’s business has a growth opportunity. You’ve known them since they launched a few years ago, helping them obtain their initial small business loan. Today, they need more capital and come to you as their trusted advisor. So you want to help them get approved promptly.
In the back of your mind, you know delays are inevitable in the commercial loan process, and you try to set expectations of how the process works. However, you also know that some of the reasons for these delays should be avoidable in a perfect world.
Avoidable delays in the lending process:
- Collecting information you already have
How often have you asked your long-standing members for information they have already provided you or for pieces of information you should already have accessible? As their trusted advisor, it eventually becomes unnecessary to continue having your members fill out the information you should already have from your relationship.
- Missing information before sending it to underwriting
In a hurry to upload the PDFs, and documents from the checklist, inevitably, wrong or duplicate items get submitted. As a result, the application inadvertently has a few things missing that seemed to be there but still needed to be submitted. Studies show that approximately 67% of loan applications have at least one item missing. So the application gets moved to the next step, only to find two documents missing. When your member asks about the progress of their loan, your only response is that the loan team needs more information.
- Wrong or Problematic information before sending it to underwriting
Inevitably during the underwriting process, an analyst will notice a discrepancy causing another type of delay. For example, sometimes the borrower submits two 1040s from the same year instead of 2 different years. Sometimes, the borrower submits the 1120s for the other business they have instead of the one applying for the loan. Sometimes information, such as the address or beneficial owners, doesn’t match the information submitted in the applications, your current information, or the secretary of state filings. As your borrower awaits an update, hoping for a final decision, you must again request additional information to move ahead.
These delays are avoidable, so borrowers shouldn’t re-enter previously submitted information. Workflow solutions can ensure only loans with proper documentation move forward. Intelligent platforms can instantly verify the submitted documents are correct within moments rather than days later.
These issues could be surfaced instantly within seconds instead of days and weeks for a more positive borrower experience. Let us know if you are open to learning how other financial institutions reduce these delays and improve the borrower experience.
