Unfortunately, COVID-19 isn’t going away anytime soon, making returning to pre-quarantine business models highly unlikely. As businesses adapt to the “new normal” and the demand for capital continues to rise, lenders have a unique opportunity to adopt a new model now—and get ahead of the game.
Here’s where the digital model comes in. Whereas traditional lending has long been fraught with hurdles—like requiring customers to book an appointment in advance or offering only in-person lending experiences (i.e., using paper-based processes)—digitizing the lending process removes these obstacles. With in-person service a limited reality, lenders should seize the opportunity to embrace digital small business lending and distribute capital efficiently and effectively throughout and after the current crisis. Here’s what you need to know about the future of business lending.
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Digitization Brings Added Convenience and Accessibility
Business borrowers want convenience. And in a time of crisis, they need it. In many cases, business owners need to get a loan decision in a matter of days—not three to five weeks. This need is so strong that 66% of Gen X and Boomer business owners and 76% of Millennial business owners would pay more for quicker service and shorter wait times.
Digitizing even part of your lending process—such as offering online application intake—can make loan products more accessible for small businesses. Small business owners can find your application through a quick Internet search and even apply via smartphone. They can get a decision quickly and be on their way to financial relief in short order.
And just picture a few weeks or months down the road: when lending institutions reopen their physical offices or extend their operating hours, borrowers may still be cautious to be among the first in-person customers. By going online now, you’re setting your institution up to stay essential long after the dust settles.
Fintech Is Key to Minimizing Risk and Maximizing Reward
Although lending to businesses in the current economic environment may be perceived as risky, as outlined in a recent McKinsey report, using fintech to build the right infrastructure can help lenders and banks maximize their reward. But building digital lending software from the ground up can take years. Instead, there are existing platforms that enable automation of manual tasks and evaluation of small credit requests using relevant, timely underwriting criteria.
Digital small business lending software can also help keep more accurate records of repayment and ensure businesses are paying consistently and on time. In addition, with insight into the business’ real-time cash flow, you may also be able to defer repayments until the business gets on a stronger footing, which your customers will certainly appreciate.
Channel Money Where It’s Needed — Regardless of Where That Is
Digital loan origination channels are an important solution for lenders, especially as demand for capital continues to intensify across the nation. Digital channels are especially valuable for small business owners without the time or manpower to make the required phone calls, wait the necessary hold times, fax and mail documents, or comb through bank statements from years past. End-to-end digital solutions start from the beginning—offering online application intake as well as digital document uploading, allowing users to simply link their bank account and historical financial data to the portal.
By increasing access and removing any barriers posed by physical locations, you can set up your institution for smooth running—even after the dust settles. Digital lending solutions allow you to channel money where it’s needed—no matter how distant or disconnected that place may be.
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Expedite Lending Processes to Serve More Small Businesses.
With small business loans in higher demand than ever before, the livelihood of both your bank and your business customers depends on your ability to distribute capital efficiently over the course of the next two years.
Adopting a digital lending channel is more than a fall-back option for uncertain times. It’s a sustainable way to integrate necessary technology, which monetizes your existing database of customers, opens you up to new ones, and unlocks newfound revenue streams through both. With the ability to implement more automation, you’ll find relief in digital channels—and odds are, you’ve already experienced the pitfalls of the alternative.
A digital platform supporting application intake, document collection, underwriting, offer presentation, and other key functions, helps expedite the lending process dramatically, and can be what catches you up—or even puts you paces ahead during times of overwhelming demand.
Although the future of lending arrived earlier than we perhaps thought, the move to digital lending is here to stay. Lenders and banks with digital operations are in a prime position to aid customers immediately and grow for the long term. And for those who haven’t been as quick to adopt new processes, there’s still time to make the necessary shift.
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