Part II: All you need to know before you automate your commercial lending process  

What is the cost of a mistake or a delay in commercial lending?   

Let’s put a price tag on every wrong b2b loan decision.  

Average SME loan sizes shed some light. For a large bank an average is $564k, for a small bank – $185k and for an alternative B2B lender -$80k.  

And yet, over 30%  of business finance applications are declined because of insufficient credit history data. This means that a business borrower may be viable and good for the money, but the organization simply can’t service them because of their outdated processes and scoring methods.  

A B2B lending operation that isn’t automated efficiently, isn’t only losing money due to poor digital experience for the borrowers. Even though, business borrowers do deeply appreciate smooth and effortless experience and will pay extra for usability. But in addition: 

• Lack of agility to deploy new products lets the competitor capitalize on a market opportunity. 
• Every wrong credit decision because of poor scoring and decisioning costs a fortune. And credit decisions not backed by streamlined scoring of relevant data aren’t going to be accurate. 
• Spending too much on overhead and staff leads to higher costs for the borrower, which again scares them off and lowers your own margins.  

But before we get to the details of this topic, I wanted to share this in-depth commercial lending process automation white paper that answers all the questions you may have in the process.

Key parts of the commercial lending process that require automation 

First, let’s get a clear shared vision of the important elements of any commercial lending business that will require automation.  

1. Commercial loan origination process. Loan origination logic and details depend on your business lending vertical. You need the capability to configure pre-qualification, loan application, underwriting, and approval processes. 
2. Credit risk management. Credit scoring and loan decision quality make or break commercial lenders. You need to make sure your solution can perform accurate credit scoring based on both traditional and alternative scoring factors.  
3. B2B loan management/servicing: The process of overseeing the entire lifecycle of a commercial loan. This includes the ongoing administration of the loan including schedules, payment processing, balance tracking, enforcing penalties communications, and adjusting loan terms if necessary.  
4. Debt collection: The process of pursuing payments of debts owed by individuals or businesses. 
5. Reporting and analytics: Generating and analyzing reports on loan performance, portfolio risk, and financials. 
6. Document management: Handling the generation, collection, and storage of necessary loan documents. 
7. Client communication: Automating notifications, reminders, and updates sent to borrowers.  
8. Compliance checks: Ensuring adherence to regulations and standards in the lending process. 
9. Security and auditing: Implementing and maintaining cybersecurity measures and performing regular system audits. 

How to automate commercial loan origination and credit scoring 

Commercial loan origination and credit scoring are notoriously complex processes. And what commercial lenders need to pay most attention to too when choosing their lending technology provider. 

Flexibility of the scoring model and decision rules, as well as granularity with which you can build credit products and loan origination flows define a b2b lending business.  

Once the loan is analyzed, processed, and approved, there shouldn’t be anything for you to worry about, because you are confident in the gatekeeping that is your origination and underwriting.  

However, with the modern automation tools it is now possible to configure a commercial origination and underwriting processes intuitive for the borrower as well as reliable and stress-free for the lender.  

You can see a video example or how TurnKey Commercial handles these processes below.

Many lenders use the fully automatic loan decisioning process in TurnKey Commercial. But you can also set business rules that send loan applications to manual decision process. In this case, your loan officer gets all the data and insight we have on the borrower and their business in an easily consumable form. 

How to choose the right commercial lending automation for your b2b lending business 

Whether you start a commercial lending business from scratch or manage an existing one, the need for meaningful digitalization is clear to everyone.  

However, stakeholders may be anxious about the changes to the status quo the new technology will bring and how their role will change. But without an all-encompassing centralized lending infrastructure, it’s not feasible to keep track of all incoming data and use it to make informed decisions automatically on all stages of the B2B loan’s lifecycle.  

Choose your approach to commercial lending automation 

1. Fragmented Automation Tools. These are standalone software solutions that automate specific tasks or processes within the commercial lending workflow, such as loan origination or collections. While they can improve efficiency in certain areas, the lack of integration can lead to data silos and operational inefficiencies.  
2. Boutique Solutions. Custom-built and often expensive, these solutions are tailored to a lender’s unique needs. However, they can be hard to maintain, update, and scale. Over time, their legacy code could become a burden, demanding additional resources and slowing down operations. 
3. Single end-to-end commercial lending infrastructure. TurnKey Commercial, as a prime example, provides comprehensive automation across the entire lending lifecycle, from loan origination, scoring, and decisioning to loan management collections and reporting. These system offers seamless integration, data consistency, and scalability, improving operational efficiency and decision-making capabilities. 

TurnKey Commercial is a proven one-stop platform that grows your loan portfolio while cutting operational costs and risks. Over the years, we’ve condensed the most efficient and optimized ways to automate commercial lending and packed it in a solution with the record time-to-market. TurnKey Lender platform has a proven track record of credit automation for lending businesses in 58 countries who currently service over 50 million borrowers. 

What commercial lending automation can help you achieve 

Most commercial lenders that come to us, look for a combination of these three main things: 

1. Lower operational costs – B2B credit, if done incorrectly, can be an extremely costly operation to maintain. And the higher these costs, the worse for the SMB loan terms you can offer and experience you can provide B2B borrowers.  
2. Minimizing credit risk – since analyzing businesses is way harder than analyzing people, B2B lenders need sophisticated credit scoring and decision-making tech on their side.  
3. Growing quality portfolio – reaching more high-quality business borrowers and being able to offer them transparent and easily accessible finance where and how they need it. 

And we excel in making all of those a reality for any kind of B2B lending business. Book an intro call with us to try it on. 

Read this next

This is a part of a 3-chapter series with all you need to know to automate any kind of commercial lending process. You can continue with this course here:

• Part I: How to enter the commercial lending space (10 high-growth business lending sectors) 
• Part III: B2B credit automation that cuts operational costs and minimizes credit risk
• White paper: How to automate every part of the commercial lending process