Traditional SME lending processes have one major problem: they were designed to assess consumer credit risk, not business credit risk. It’s like trying to determine how reliable a vehicle is based on the driver;
while this may have an impact, there are a ton of other factors that determine how likely a car is to break down. To support SMEs with faster access to funds, lenders need to build lending processes specifically designed to
quickly understand a business’ financial position and possible default risk. This means focusing on and fixing three key areas that prevent SMEs from experiencing a high speed, ‘self-driving’ loan application experience:
One of the key benefits digital lenders offer to SMEs is a simple application process. Business owners complete their applications online without the need for long forms, in-person visits, phone calls, or large amounts of paperwork. And it doesn’t stop there. Applicants can track progress, submit supporting information, and get loan repayment terms all through online portals. As a lender, it’s like you’re opening the door to a self-driven lending journey that gets your customers to their destination at record speed! To power a cohesive lending experience, lenders use powerful decisioning technology to automate the arduous tasks that would have fallen on both the business owner and the lender to complete. These tasks include automatically gathering and pulling relevant information from business documents, accounting data, and tax forms, completing fraud checks, assessing risk, and determining pricing. Surveys have shown that on average a business owner spends over 33 hours completing loan applications. With the right technology lenders can significantly reduce the amount of time businesses spend submitting applications and providing supporting documentation, simplifying the entire application process.
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