Lending Software Solution Spotlight: Small Business Loan Origination

Lending Software Solution: Small Business Loan Origination

In lending, things seem to change monthly…products, regulations, people, etc.  Financial institutions are having to constantly keep up with an ever-changing landscape. Keeping up with the changes and making sure procedures are done consistently while staying in compliance with regulations is hard to do when there is not a centralized lending software solution and clear processes.

I started in banking as a Teller/Customer Service Associate in 1998 at the main office of a bank with 16 offices that was about $900M in assets. After about two years, I was promoted to work within our Consumer Lending team as a loan processer.  Our team consisted of two Consumer Loan Officers and me as the processor tasked with completing all the consumer loans received (both approved or declined) at our office. The struggle to have the set up at multiple locations was challenging to make sure we were making “consistent” lending decisions to stay in compliance.  The lending software solution we used was not set up to provide safeguards to assist with maintaining the necessary consistencies. Fortunately, it was not long until our bank decided to centralize our processes. Having a centralized team and a lending software solution that helped control consistencies across the board played a HUGE role in the success of our team (lenders, processors, bank as a whole) moving forward. 

Shortly after my stint within our consumer loan department, I moved over to be a part of a new team – Commercial Small Business as the Small Business Portfolio Manager. The department was started when the bank decided to segment loans less than $250k (aggregate exposure under $1M) and greater than $250k. While deals above $250k would take more time with financial and collateral analysis because of more complex deal structure, the underwriting review process was similar: 

  • A Credit Analyst would have to input the financials into a spread sheet for specific ratios.
  • The Credit Analyst would also review the collateral information to make sure it the collateral was viable.
  • The Commercial Lender and Credit Analyst would present loan to the Loan Committee for approval.

More and more loan requests were coming in from small business owners with the amount requested being under $250k. The main reason to create the new “Commercial Small Business” team was to hopefully expedite the lending process for small business owners and their requests.  Our team could have been even more efficient if we had a lending software solution that would allow us to minimize downstream reworks and duplicate data entry as well as a scoring model that would help to assist with decisioning. 

Now, come full circle to my time here at Baker Hill.  Baker Hill NextGen® Small Business Loan Origination is a lending software solution that would have been a lot of help to my Commercial Small Business team. It would have lifted some burden off of the Commercial Lenders along with allowing more of a streamlined/automated workflow on deals that were smaller in value, but greater in number of applications. Typically, we only had about four Commercial Lenders and about 13 Branch/Banking Center Managers, so we would have been able to have more people to discuss loan opportunities for small business owners. Also, having a scoring model approach for approval/decline recommendations would have been helpful because if you think of it, a small business deal is really similar to a consumer deal. The largest differences are that the borrower is a business/organization instead of an individual and typically the value of the deal. The scoring model inside Baker Hill’s small business lending software solution provides recommendations based on the credit file of the borrower(s) and the institution’s credit/underwriting policies that are set up “behind the scenes.”

Being able to create a dynamic credit memo inside the lending software solution would have also made it much easier to put together more complex deals. Updating financials and balance information could be a time-consuming task since we were pulling information from multiple spreadsheets and systems. With Baker Hill’s lending software solution, our team would have been able to update our credit memo with a couple of clicks, making it much more efficient to update loan packages for our committee.

Using the small business lending software solution from Baker Hill allows for opportunity to create consistency and streamline workflows across the life of the loan opportunity for your organization. Baker Hill has been providing innovative lending software solutions and expert guidance to banks and credit unions for over 35 years. Built by bankers for bankers, we know the importance of automating manual processes in small business lending. Visit our resource guide to learn more about how Baker Hill’s lending software solutions can help you gain efficiency, reduce risk, and drive growth.

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