Traditionally, securing a commercial loan was anything but a cakewalk. From assessing a range of parameters, including the business’s credit history and financial statements, to calculating collateral requirements before finally approving the loan, -the process is evidently time-consuming and lengthy.
Additionally, multiple teams from various business units that are at times located in different cities and offices were involved on a selective basis adding to the complexity of the overall process.
Therefore, it is clear that this document and process-intensive activity was in dire need of a major revamp.
This is where commercial loan origination software solutions entered the fray. These tools are integrated with a range of features that aim to accelerate the entire loan approval process, making it efficient and also aiding lenders to make smarter decisions.
In this blog, we will cover the role of commercial loan origination software in streamlining and accelerating loan approval for businesses.
Before we being, let’s understand what we mean by commercial loan origination software.
What is a Commercial Loan Origination Software?
Commercial loan origination software is a unified digital solution that facilitates seamless loan origination, provides detailed insights into various loan accounts, and helps lenders underwrite loans without any hassles. Further, it is a useful tool that enables lenders to stay on top of the latest regulations and also provides a spotless customer experience.
It is known that commercial lending primarily refers to creating economic benefits for businesses while simultaneously creating profits and managing risks for lenders. Evaluating the creditworthiness of a business is a nuanced process wherein several intricate parameters are taken into account. It is also worth noting that digital tools used by lenders can influence underwriting standards, the scale of unpredicted losses, approval times, and cos
Therefore, more and more lenders are looking for digital solutions that streamline and also automate loan processing, boosting the overall quality of the loan portfolio.
4 Ways Commercial Loan Origination Software is Streamlining Loan Approval
Now that we know what commercial loan origination software is, it is a good time to explore its features.
Typically, it took a few days and even weeks for loan applications to move between stages. Automation is proving to be a game-changer and has shown promising signs thus far to accelerate loan processing.
Are commercial loan origination software worth the hype? Let’s find out.
1. Enhanced Customer Management
Loan processing involves multiple steps that can easily turn into an unpleasant experience for both lenders and borrowers. The starting point of the process is to gather all the necessary and relevant information from the borrower.
As straightforward as it may seem, this task is labour-intensive and also challenging. From filling out different forms and a series of printed and electronic documents to creating a physical customer profile, the process is mundane and cumbersome.
The likelihood of incorrect data being captured in the lender’s systems increases with the frequency at which the information in these electronic and paper documents is entered in and re-keyed.
A commercial loan origination software eliminates this problem making it easier to access data and also minimises duplication of documents. As the data is stored in a central location, every employee with the required access can view it without any problems.
2. Systematic Credit Analysis
A commercial loan origination software allows lenders to analyse a customer’s credit history within seconds. The tool can collect relevant data from a borrower’s financial documents once it receives permission from the lender.
Further, many loan origination solutions can also go through borrowers’ documents and create a spreadsheet. New-age technologies, including optical character recognition and machine learning, help lenders extract the right information and also pre-screen borrowers to facilitate swift credit decisions within a few minutes.
3. Risk Management
One of the major benefits of electronic data collection and automated financing is that it gives analysts more time for risk assessment. Ultimately, the analysts are either relying on or creating new forecasting models to evaluate the financial risk of the borrower and their ability to repay the loan.
Credit analysis also includes automated risk rating that is calculated based on the probability of default (PD) and loss-given default (LGD) models.
A commercial loan origination software considers these risk metrics during loan assessment.
4. Optimized Workflow Automation
Another reason why commercial loan origination solutions have taken centre stage in recent times is their ability to automate workflows. These tools can define and automate various workflows during loan processing and distribution for in-house teams.
These solutions come with several features that facilitate scheduling meetings and interactions with borrowers. Onto the next step, these digital tools also assist in underwriting and various decision processes based on which lenders can sanction loans.
Wrapping It Up
Automation is not just a buzzword in the financial services sector anymore. At present, a majority of financial service providers and financial institutions are turning to automation to accelerate their processes. This also explains why the demand for commercial loan origination software has witnessed steady growth in recent years.
Additionally, the digital lending platform market is tipped to grow at a CAGR of 26.5% from 2023 to 2030, indicating the rising demand for digital finance solutions.
Finezza’s loan origination system has paved the way for a swift, streamlined, and powerful loan origination process. Trusted by multiple leading financial service providers, our commercial loan origination software is loaded with an array of useful features to facilitate effective loan processing.
Book a demo to know more!
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