Historically, business lending has been riddled with manual, labor-intensive processes, taking anywhere from 35 to more than 120 days to complete.

The process typically starts with the lender requesting a mile-long list of financial reports, including balance sheets and financial statements, bank statements, tax returns, accounts payable and receivable, details about the vendors on those lists, as well as details about outstanding loans and tax returns. It can take the borrower days or even weeks to prepare and submit.

After investing a significant amount of time gathering this information, the borrower submits it to the lender, typically using insecure methods. From there, the lender reviews the documents received and may go back to the borrower for any items not received. Then, once all information is received and accounted for, lenders undergo the tedious process of manually spreading the data into their legacy systems.

Finally, the data is sent to the underwriting team for review and approval. To determine credit worthiness, underwriters use a combination of tools and documents to approve or deny a loan.

This process is simply inefficient – and for many reasons.

First, using outdated data increases risk for the lender. Second, SMBs are submitting their data using insecure methods which compromises the security of their data.  The data is also subject to manipulation from human intervention. Third, when lenders have to manually input the data into their spreading or loan portfolio systems, the chance of error increases. Fourth, the likelihood of having to request additional information from the borrower causes inefficiency. Fifth, at the point where the data is sent to the underwriting team, the decision to approve or deny a loan is made with limited, out-of-date data. Sixth, viewing trends in the business borrower’s data is challenging when partial data is being used.

This puts financial institutions at a significant disadvantage in a market where an alternative lender is turning around the decision in hours and days. The borrower’s data becomes more outdated the longer it takes to reach a decision.

Securing financing is neither fast nor easy, but business owners need it to be both.

In our latest whitepaper, we offer insights on how financial institutions can transform their SMB lending processes, explore how outdated SMB borrower data leads to inefficient processes and puts the lender at greater risk, and discuss ways to drive efficiency, minimize risk and gain a comprehensive understanding of your SMB clients.