Like every other business in recent years, banks have had to become more efficient and competitive in the delivery of their products.
As a result, banks have taken great strides in providing services, including commercial credit services, quickly. Bankers understand that to remain competitive in a marketplace that continues to consolidate, they must be able to make credit decisions and complete funding promptly. Bankers must recognize and accommodate the significant deadline pressures their borrowers often face.
Changing technology makes it relatively easy for banks to offer and deliver new products, but technology alone can’t streamline lending procedures to everyone’s overall advantage. To do that, well-trained people must ask the right questions and match the right technology and products to each business.
There are three areas of opportunity for speedy service in commercial lending. One is in the origination process, the second is in loan documentation and the third is in loan servicing. When all three are done well, they will ultimately lead to significant cost savings and efficiencies for both customers and banks.
To originate commercial loans quickly, bankers must get the information they need from customers promptly and then quickly steer them through an approval process. If a banker doesn’t let a prospect know exactly what is required (typically three years of financial information), the loan application can be delayed.
Of course, a borrower’s delay in supplying information can also hold things up. When the proper information is on hand, however, loans can sometimes be approved in a few days. In addition, many banks offer instant approval on some consumer or small-business loans.
Once a loan has been approved, loan documentation is required. Customers have the opportunity to influence how quickly this step is completed by providing bankers with appropriate back-up documentation, such as corporate resolutions and asset descriptions.
Technology helps. Banks with integrated computer systems have an advantage. If information must be keyed into separate systems at every step, the process slows and errors creep in. Integrated systems designed to reduce continual re-entry of information increase efficiency and accuracy, in addition to reducing labor costs.
On larger, more complex loans, experienced lending officers can add significant value in steering loan document preparation duties to well-qualified transaction attorneys. A loan officer who remains involved in this process will ensure that attorneys draw up documents that accurately reflect the agreed-upon terms. That can save big headaches in the long run.
The most critical factor in obtaining commercial credit quickly is the relationship a business has with a bank and its loan officers. The days when banks averaged one employee for every $1 million in assets are gone. Today’s banks have far fewer. That makes it more vital than ever for borrowers to get to know their lending officers, especially when speed matters.
All businesses have short- and long-term goals. A lending officer who truly understands a business’ strategic plan will be that company’s advocate throughout the loan application and approval process, helping smooth the path prompt funding.
In today’s extremely competitive marketplace, speed can be a make or break a proposition. Banks with efficient, effective and responsive commercial credit processes can help their customers succeed.
Thomas D. Panos is executive vice president and chief commercial banking officer for MB Financial Bank. Reach him at (847) 653-1995 or www.mbfinancial.com.
