The time for digital commercial lending is now!

The latest disruption to the financial industry is the emerging presence of digital commercial lending.  Consumers have long been able to apply for a personal credit card or mortgage online, but the commercial side of the lending house has been slow to change.

The technology is now available, and the financial industry as a whole is starting to embrace the idea of digital commercial lending, so it’s a win-win for small business owners.  Businesses can still use their trusted financial institution but also have the ability to apply for and receive approval in record time using online business lending software.

The FinTech commercial lending train is picking up speed and if credit union’s don’t get on board soon or are too slow to adopt digital commercial lending they will be left behind and their members will be looking for a financial institution that can keep up with their fast-paced business needs.

Jim Gallagher, CEO of Lucro a CUSO based in Tallahassee, Florida, saw the need for a small business fintech lending solution.  According to Gallagher, “Most smaller credit unions don’t have a dedicated small business salesperson, so the process falls on the consumer loan officer or branch manager.”  This is not cost effective so those same small credit unions shy away from business lending. On the flip side, for a larger credit union who has a full time business development officer, Gallagher says, “that salesperson is focusing on larger dollar, more complex requests. They can’t spend their time chasing and then originating smaller dollar loans.  It’s just not cost effective for either scenario.”

So what’s the answer?  And why should credit union’s embrace online business lending solutions right now?

1. There are more choices than ever.  The market is ripe for small businesses and small business lending.  A quick online search will direct someone to an alternative lender, or five!  Be there for your member before they click away.
2. Consumers expect it.  Figure out how to digitize the face-to-face lending processes.  There is very little that consumers don’t do online. Forcing them to fill out an application and then wait days or weeks for approval is archaic and when they can get answers from Siri or Alexa or any .com in seconds, they simply won’t stick around and wait anymore.
3. Credit still matters.  Just because you’re using a FinTech product doesn’t mean you don’t hold yourself and your members to the same standards.  The process is changing and freeing your loan offers to do other things, that’s all.
4. It’s the ultimate “sticky” product.  Credit Unions who offer credit cards, personal loans, student loans, mortgages and small business loans, among other financial product will have members for life — assuming the process for getting those loans is as simple and fast as they want it to be.  The more a single lender can satisfy all the financing needs of their borrowers, the better they’ll do.
5. Partnerships matter.  Alternative lenders have speed, better user experiences, and a regulatory vacuum wherein to operate.  To compete with these alternate lenders, find a FinTech company that you can partner with and will define how the credit needs of your members’ small businesses are met in the future. Lucro Commercial Solutions is an example of a fintech partner that provides a digital business lending option for credit unions.

It’s a natural fit for members to turn to their trusted CU for their home, auto and credit card loans, but what will they do when that same member turns to your credit union for their small business loan?  The time for FinTech business lending solutions is now.

LUCRO is a team of dedicated and knowledgeable business lending experts who thrive at assisting financial institutions. Whether it’s support with underwriting, servicing, and documentation services for loans, or developing commercial lending policies and procedures, we pride ourselves in helping your financial institution get the most out of your portfolio.