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For faster loan origination, stop doing this

Mary Ellen Biery
November 17, 2023
Read Time: 0 min

How to close more loans by speeding up lending and credit analysis

Seeking a quicker loan origination workflow is worth it. Learn where to find opportunities for improvement.

You might also like this on-demand webinar on the red flags of emerging CRE risk.



Unchanged for decades

Are origination processes outdated?

Does your financial institution need to fix its loan origination process? At many banks and credit unions, the way lenders and underwriters have handled loans is basically unchanged from decades ago.

Taking a critical look at the existing steps for the financial institution’s loan applications and credit decisions can uncover opportunities to offer faster business loan decisions that provide a better member or customer experience.

This article explains why seeking a quicker loan origination system workflow can be worth it, and it outlines, step by step, where opportunities for improvement lie in traditional lending processes.

Boost borrower satisfaction

Why look for better, quicker origination?

Frustrating processes tied to credit requests and slow loan decisions are among borrowers’ biggest complaints about banks and credit unions compared to online or alternative lenders. While small business borrowers, for example, predominantly choose where to apply for credit based on an existing relationship with a lender, more than half who source loans from online lenders cite the speed of funding as an influential factor.

Datos Insights recently described its analysis of more than 1,000 small and midsize businesses (SMBs) comparing how various generations behave differently when shopping for credit for an SMB. Millennials and Gen Zer business owners were more likely than their older counterparts to borrow at the time of the borrowing need or within days of it. At the same time, the younger generations are less sensitive to loan terms, which Datos Insights said is likely “because their tardiness to the lending process weakens their ability to negotiate more favorable terms.”

Financial institution staff and management eager to grow the loan portfolio are themselves familiar with the aggravations, bottlenecks, and inefficiencies associated with loan approval processes. 

Many frustrations with the loan application process and underwriting are tied to bank and credit union reliance on manual or paper-based systems. Loan origination also involves multiple staff, making lending workflow and communication more challenging.

Download this infographic to see how construction loan management compares using a spreadsheet-based systems and a software solution. 

Despite understanding these factors slow down loan origination, almost half of SMB lenders analyzed for another Datos Insights report described their SMB lending as highly manual. Only about 1 in 6 of the lenders were heavily automated.

Pie chart showing lenders' level of automation for SMB loans

For banks and credit unions with ambitious growth goals for lending, here are 12 aspects of traditional lending that slow down the loan origination process and aggravate staff and borrowers. Also described below are what those steps look like using loan origination software. Automation and workflow efficiency take borrowers from loan requests to credit decisions without the delays, repeated data entry, and miscommunication familiar to many loan officers and credit analysts.

From loan request to closing

How to have faster loan origination

Here are 10 aspects of traditional lending that slow down the loan origination process and aggravate staff and borrowers. Also described below are what those steps look like using loan origination software. Loan automation and workflow efficiency take borrowers from loan requests to credit decisions without the delays, repeated data entry, and miscommunication familiar to many loan officers and credit analysts.

1. Stop the loan-request runaround. Use a digital loan request.

Stop: Driving to pick up bank statements and other supporting documents from a borrower or making repeated phone calls to secure them, and tracking documents needed for loan processing on a spreadsheet one by one as they trickle in.

Instead: When borrowers use a digital loan request (available to them 24/7, from home, office, or even in the branch with FI assistance), current-customer information is automatically pulled into the form. The responsive loan application shows borrowers only those fields they need to complete, and the data flows through to later processes. The digital loan application lists the documents they must provide (which they can do through a secure portal) before the request can move forward to credit decisioning. The process is more convenient and more straightforward for loan applicants, so the request is ready for review more quickly.

2. Stop hunting and gathering non-financial info. Review everything from one system.

Stop: Visiting multiple websites to record credit scores, conduct an OFAC check, perform ID verification, and satisfy other nonfinancial qualifications required for good loan decisions.

Instead: Review the loan request, which has credit scores and other nonfinancial qualification information pulled in via data partners, without leaving the loan origination system (LOS).

3. Stop manually building term sheets. Click a button that imports yours.

Stop: Creating a term sheet in Word or Excel, using the application to re-key all loan and customer or member information and referring to the institution’s credit policy document, then checking everything for accuracy.

Instead: Click a button to run term sheets and other reports, such as a proposal, executive summary, commitment letter, etc. Customer information is captured accurately with a single point of data entry with the loan request, so you can build out templates based on the bank or credit union’s credit policy and automatically generate reports you and others need throughout the credit decisioning process.

4. Stop manual tax-data entry. Easily upload and import the data.

Stop: Entering tax return data into a spreadsheet, then checking the spreadsheet for accuracy to begin the underwriting process.

Instead: Skip this step entirely. Dig into analysis faster when the loan origination system’s tax return scanning software uploads any file type of borrower’s tax documents and spreads them accurately and consistently. The time savings for credit analysts speeds up the decision for borrowers, creating a better chance to win deals. Lenders, meanwhile, have higher confidence in the underwriting process.

5. Stop spreading loans by hand. Start analyzing the loan request.

Stop: Manually spreading financials, tracking source documents and spreadsheet versions while ensuring to incorporate all changes.

Instead: Click a button and quickly spread and analyze loans using automatically calculated metrics selected by the institution. Credit spreads can be two to three hours faster per loan when credit risk software auto-imports financial data from the individual’s bank accounts and automatically creates a personal financial statement. The analyst can focus on analyzing large, complex scenarios rather than data entry and spreadsheets.

6. Stop laboring through risk ratings. Generate fully documented ones with one click.

Stop: Determining a risk rating based on the analyst’s review of financials and their individual interpretation of the institution’s risk rating scale, then tracking changes in a spreadsheet each time updated financial information is received.

Instead: Click a button, and the platform’s credit rating software will generate a risk rating with complete documentation based on the institution’s standardized rating system using the borrower information and customized factors and weightings. Examine risk rating changes across the portfolio on one screen and automatically update risk ratings when the borrower provides updated financials with increased objectivity, accuracy, and speed.

7. Stop manually drafting credit memos. Import info automatically.

Stop: Spending hours writing up the credit memo. Even if previous memos are re-used as templates, credit analysts must first compile all customer and financial information, the loan data, metrics, pricing, risk rating calculations, and collateral photos. Then, they must attach spreadsheets of the financials and review all information for accuracy (especially if cutting and pasting text from previous memos).

Instead: Click a button to auto-populate required information into an institution-customized credit memo template for a fully documented credit memo.

8. Stop cutting and pasting loan docs. Jump to reviewing them.

Stop: Manually preparing loan documents by copying and pasting agreed-upon terms and conditions, entering all ratios, disclosures, and the loan structure verbiage into the proper data fields.

Instead: Click a button for all information to be electronically pushed into legal loan documents that are populated with necessary disclosures and formats and are ready for signatures.

9. Stop due diligence doc distress. Get notified when they’re received.

Stop: Wrangling due diligence documents.

Instead: Send an automated email to notify borrowers of documents needed for closing and provide a link to upload them securely into a portal. When notifications alert the lending team of documents received and collected in a central relationship document library, tracking is easier, too.

10. Stop chasing down borrower signatures. Close the loan and move on to the next.

Stop: Mailing or faxing loan docs to multiple people and businesses for signature and wondering who has signed what.

Instead: Capture borrower signatures digitally, saving time and money so that you can track and close the loan faster.


'Better loan data'

Help for growing portfolios

Consider how much time staff would save on each loan request with this faster loan origination system workflow. Would eliminating these frustrations allow the bank or credit union to win more business?

Here’s how one Virginia-based credit union with less than $1 billion in assets described the institution’s loan processes before and after implementing a loan origination platform:

“Before Abrigo, we used multiple spreadsheets, every step of the loan process was manual and separate, and none of our systems communicated with each other. Since implementing Abrigo, we have eliminated our manual processes, we can provide better loan data for review and ultimately better decisions. Saving time on the process has helped us grow our portfolio and have a better understanding of our current portfolio. Abrigo has also made tracking miscellaneous items so much easier.”

When frustrations with credit requests and decisioning have become commonplace due to processes that have been the same for years, loan origination software can provide a competitive advantage and help support loan growth through scalable processes.

Read lenders' reviews of commercial loan origination software in this report by Datos Insights

Keep me informed Download Report
About the Author

Mary Ellen Biery

Senior Strategist & Content Manager
Mary Ellen Biery is Senior Strategist & Content Manager at Abrigo, where she works with advisors and other experts to develop whitepapers, original research, and other resources that help financial institutions drive growth and manage risk. A former equities reporter for Dow Jones Newswires whose work has been published in

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About Abrigo

Abrigo enables U.S. financial institutions to support their communities through technology that fights financial crime, grows loans and deposits, and optimizes risk. Abrigo's platform centralizes the institution's data, creates a digital user experience, ensures compliance, and delivers efficiency for scale and profitable growth.

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