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How to Save Time on the Loan Underwriting Process

A business submits an application for a commercial loan. Now it’s time for the loan underwriting process – the most critical step in loan origination. It’s also one of the most time-consuming parts of the process. If it doesn’t go smoothly, it can result in significant delays stemming from additional efforts and documentation.

For commercial lenders, it’s important for the loan underwriting process to move along in a timely fashion, for several reasons:

  • Offers a competitive advantage: In a competitive lending market, borrowers often seek financing from multiple lenders simultaneously. Lenders who can process loan applications quickly and provide timely approvals have a competitive advantage in attracting borrowers. 
  • Enhances customer satisfaction: Delays in underwriting can lead to frustration and dissatisfaction among borrowers, potentially damaging the lender’s reputation and customer relationships. Borrowers value efficiency and prompt communication throughout the lending process. 
  • Decreases missed opportunities: Delays in the underwriting process can result in missed opportunities for both the lender and the borrower. For lenders, delayed underwriting can prolong the time it takes to deploy capital, potentially impacting their loan origination targets and revenue generation.
  • Creates better risk management: Delayed underwriting increases the likelihood of overlooking important risk factors or inaccurately assessing credit risk, leading to higher default rates and potential losses for the lender. Timely underwriting allows lenders to promptly assess borrower creditworthiness, evaluate risk factors and make informed decisions about loan approvals. 
  • Facilitates regulatory compliance: Lenders are often subject to regulatory requirements that mandate timely processing of loan applications and adherence to specified timelines. Delays in underwriting encourages non-compliance with regulatory deadlines, potentially resulting in penalties, fines or legal consequences for the lender.
  • Increases operational efficiency: Efficient underwriting processes contribute to overall operational efficiency for the lender. Timely completion of underwriting tasks minimizes bottlenecks in the lending workflow, reduces idle time for staff, and optimizes resource allocation. In an optimal state, lenders can handle a higher volume of loan applications without compromising quality or increasing costs.

How Can Lenders Save Time on the Loan Underwriting Process?

Some lenders are still bogged down by manual processes, which require a lot of time and increase the risk of human error. On top of the hours necessary for manual input and review of materials, errors can even further delay the process. Lenders risk potentially damaging their relationship with their customers. 

Savvy commercial lenders use automated underwriting systems to save valuable time. Automated software accelerates the loan origination process, streamlines workflows and reduces manual intervention. 

Here’s a detailed look at how automated software can speed up the process for lenders:

Facilitates Enhanced Decision-making

Accuracy in decision-making is paramount. Manual evaluation of applications can be the key component in dragging out the commercial loan process, not only with added steps, but also the amount of human error that can occur. By leveraging algorithms and predefined criteria, automated loan software empowers underwriters to make better credit decisions. It eliminates all the added time required to redo steps that may have been done improperly. 

A set of lender rules and their risk criteria is customized in automated systems to assist the underwriting team. A combination of mathematical algorithms and artificial intelligence (AI) automatically run underwriting checklists to ensure the same criteria is applied for each deal. On the basis of a prospect’s attributes, automated software determines if the client is eligible and what kind of financing they may qualify for and the right amount. Also, underwriters can quickly spot areas of concern, including fraud, to reduce risk. 

Eliminates Unnecessary Paperwork

Creation of manual reports is a big headache for lenders, leading to risk of mistakes and taking away the time they could be spending on higher level work. Automated loan systems reduce the need for paperwork and manual data entry for faster loan processing times.

Automatically Pulls Critical Reports

Automated software generates business credit reports and background search results, such as people search, criminal search, bankruptcies, liens and judgments from trusted data bureaus. All information is at your underwriting team’s fingertips, reducing yet more manual work and steps.

Automated systems can also instantly generate accounts receivable and accounts payable summaries for aging reports and analysis right when you need them. Decipher Credit’s system can take a detailed aging report in any format from a customer’s accounting system and apply AI to the file to automatically spread the aging to indicate to the lender how much is eligible. Since all formats are different, AI’s time-saving capability is critical in this step. No other lending platform does this. 

If there’s one thing most people wish they had more of it’s time. The loan underwriting process requires a lot of it, with redundant, manual tasks and an inefficient flow between lenders and borrowers. Borrowers appreciate fast decisions, and being able to give this to them is a differentiator for certain lenders.

Decipher’s platform was built by lenders for lenders. We understand your pain points and what you need to make your job quicker and more efficient. Our sophisticated and comprehensive platform streamlines origination, underwriting and onboarding, so you can do more business in less time. To learn how it can help your business, request a demo.