Streamlining Your Commercial Lending Process Helps Eliminate Risks

With interest rates still historically low, and the current administration pressuring the Federal Reserve to keep them that way, community banks and credit unions are in a position to benefit from borrowers who want to take advantage of these rates while they can. Certainly, interest rates are working in your favor. But, what about your commercial loan origination process? Streamlining your commercial lending process helps eliminate any inefficiencies and redundancies to help you close more qualified loans, while remaining compliant.

Manage the Loan Cycle, Manage Credit Risk

There are four key areas critical to the process of improving efficiency in the commercial lending loan origination and management process:

  1. Analysis & Underwriting
  2. Loan Portfolio Management
  3. Data Interfaces
  4. Document Imaging

Any efficiencies made and risks managed in any of these areas can result in improvements across the other three. Let’s take a look at each stage, where the disconnects can happen and how to bridge the gaps.

Analysis & Underwriting

First and foremost, efficient analysis and underwriting requires proper oversight from the top down of the multiple moving parts. These parts work best only when they’re connected, which allows for immediate addressing of any problems, as well as keeps your community bank or credit union in compliance.

Disconnects most frequently occur when policies, procedures and processes aren’t well documented, monitored, reviewed and modified. After all, it’s nearly impossible to improve underwriting without an accurate and in-depth view, which only documentation can provide.

The Square 1 Credit Suite® analysis and underwriting component includes industry standard formats, tax forms and customizable spread templates that provide:

  • Detailed financial spread analysis with RMA comparisons
  • Global cash flow analysis for complex entities
  • Integration with loan committee presentation packages
  • Commercial and Agricultural projections
  • Transactional Stress Testing to identify changing economic variables
  • Configurable scoring based on industry
  • Covenant monitoring

Having the above data at your fingertips is the insight you need to find gaps in your process, but more importantly, the opportunity to close more qualified loans at minimal risk.

Loan Portfolio Management

Community banks and credit unions feel the pressure that heavier regulatory oversight has added in the years since 2008. It’s created a double-edged sword, considering low interest rates mean more loan opportunities and more loans require buttoned up commercial loan portfolio management in order to be compliant with regulations.

Without an automated commercial loan portfolio management process, it’s difficult, if not impossible to produce proof to examiners. Much less assess the quality of your process and risk level. Examiners are more likely to be confident in loan processes you conduct using loan portfolio management software as this reduces your community bank’s or credit union’s risk exposure, while creating operational efficiencies.

The Square 1 Credit Suite® automates the documentation tracking, loan management and work outs aspects of loan portfolio management, such as:

  • Tickler creation and exception management
  • Workflow and loan monitoring
  • Dashboard overview of user-specific loan portfolio in key areas
  • Risk rating identification and management
  • Past due action plans
  • Watch list reporting of criticized and classified loans

Data Interfaces

There is a boggling number of data entry points for each loan in the commercial lending process. Community banks and credit unions may be at a disadvantage manpower-wise in getting and keeping data updated, especially when there are multiple sources to update with the same information. The more interfaces that require updating, the slower the efficiency and the greater the risk.

Streamlining data entry into one source that then populates across your system is a matter of improving efficiency for those inputting the data and those who need it to make decisions and show compliance.

The Square 1 Credit Suite® operates as a single-point solution for credit risk management that replaces redundant data entry and moves common data between your critical software systems. Your customers, loans, and deposits will be loaded into the system and updated on a nightly basis with our powerful Host Core Download. Data entry can be reduced even further with one of our loan document platform interfaces.

Document Imaging

Without a user-friendly, compliant document imaging solution, too much time is spent hunting down loan documents. Too much money and resources are spent on transferring them from branch or branch and person to person for review.

The Square 1 Credit Suite® has a companion solution, Suntell Document Imaging (SDI) that automates the process of building customers’ and folder structures. SDI images are retrieved quickly and are easy to navigate. Other benefits include:

  • Store loan documents, employee data, vendor information, and more
  • Organization-defined global indexing structure
  • Images and security meet or exceed FDIC regulation requirements
  • Complete audit-trail capabilities
  • Documents are available at all branches as soon as they are scanned into the system
  • Export files for examiners or other third-party review

Streamline the Commercial Lending Operational Processes, Reduce Business Costs

Finding and solving for any disconnects in your commercial loan origination processes is essential. Implementing credit risk management software that streamlines the lending process reduces the cost of doing business, including how you originate and service your commercial loans.

Learn more about commercial credit risk management solutions.

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