In today’s competitive lending market, understanding what commercial loan applicants expect is key for any lender looking to satisfy customers and win more business. The right approach can make all the difference—and with the tools mysherpas can provide today, it’s easier than ever to create an experience your borrowers will appreciate.
To put things into perspective, let’s look at how today’s lending landscape has evolved. A recent Goldman Sachs study found that 75% of small business loans are made by banks within 25 miles of the applicant, with 44% applying to large banks, 28% to small banks, and 23% opting for online lenders. Online lending has grown significantly, more than doubling its market share in recent years.
So, what does this tell us?
First, it shows that customers still value convenience and in-person interactions. Second, small banks, while important to their communities, are losing ground in the market. Third, “convenience” now includes the digital experience, with online lenders redefining what that means. Lastly, there’s a big opportunity for lenders to stand out by using technology to free up staff, letting them focus on building relationships.
This could be your competitive sweet spot.
Banks and credit unions that want to differentiate themselves should closely examine their loan process from the borrower’s point of view. To that end, let’s explore what makes for a successful experience and how you can meet these expectations.
When business owners apply for a loan, their main goal is simple: to get the financing they need for their business. Whether it’s for growth, working capital, or a specific project, the loan needs to fit their plans.
But it’s more than just about money—borrowers care about these things too:
While getting competitive rates is always important, these three factors can set you apart in a crowded field.
To most applicants, a successful loan experience comes down to a few key elements:
Even with the best intentions, many lenders fall short. In our experience, here’s where things tend to go wrong.
One of the biggest complaints is that borrowers don’t know where they stand in the process. After an initial conversation, they often submit documents and then wait… and wait. They don’t know the next steps, how long things will take, or who’s making the final decision. A lack of clarity can lead to frustration.
Unfortunately, business loan applicants may get the funds they need, but they also may not feel good about their lender. The length of time it takes to get from the initial conversation to final approval may seem like forever to them—while it might seem like business as usual to the lender.
The loan origination process is, in fact, several processes running sequentially or, in many cases, in parallel. The loan officer, the loan processor, the analyst, the underwriter, and the management approving loan requests all have procedures to follow. The loan officer serves as the bridge with the customer and also keeps the internal process moving forward. Plus, each participant has requirements to complete their segment of loan origination. There are many opportunities for a mismatch in expectations.
Many business loans require a lot of paperwork, and while this may not change anytime soon due to legal, compliance, and regulatory requirements, the way you handle it can. Without clear disclosure of the documents needed to complete a loan package and effective task management, a borrower can feel as though they’re being asked for documents on the fly, creating “fire drills” and surprises.
Again, there are often many people involved on both sides—the borrower’s finance staff, partners, accountants, and lawyers, as well as the lender’s staff in various departments. Without a system in place to streamline and track communication, things can get messy fast. We’ve seen loan officers juggling stacks of emails and printed forms just to keep up. It’s no wonder borrowers and loan officers alike can feel overwhelmed, or that requests and tasks drop through the cracks.
We know that the commercial lending process hasn’t changed much over the years. Many lenders don’t see a problem—or maybe they just don’t see a solution. It’s also difficult to change if you believe the current process is working. But with competition heating up, especially from online lenders, sticking to the same old way of doing things isn’t going to cut it.
How do you give your loan officers and business development officers the maximum bandwidth to focus on the customers and prospects—and build close personal connections at the same time? There aren’t any online lenders I know who attend your kids’ sports games, much less the local Chamber of Commerce luncheon. How can you make the process clear, with specific responsibilities assigned upfront, and provide a way to track progress toward approval? How do you let your staff do their work without having to also handle basic, time-consuming document management tasks, such as downloading files and changing their names to fit your package structure?
Here’s what you can do:
The commercial loan process is ripe for improvement, and the tools to make it better are available now. Whether you’re part of a large institution looking to increase productivity or a local lender aiming to keep your community roots strong, embracing technology is the way forward. It allows you to be faster, more transparent, and more personal—all things your borrowers expect.
At mysherpas, we’re here to help you make this shift. Let us show you how our platform can transform your lending process and give your loan officers the freedom to focus on what they do best: building relationships.
