Skip to main content

Oregon Bankers Association | Long Waits, Difficult Applications Aggravate Small Business Borrowers

Download Here

 

Oregon Bankers Association

By Mary Ellen Biery, Abrigo
Spring 2019

The good news for banks and credit unions? Small-business borrower satisfaction is higher for these lenders than for online lenders, according to a new Small Business Credit Survey by the Federal Reserve. The not-so-good news? Satisfaction with online lenders has increased over the last two years, even as net satisfaction with large and small banks has stayed relatively flat or declined. Online lenders also saw a moderate increase in their share of applications from small businesses, to 24 percent from 20 percent in 2015.

“Applicants to online lenders report being attracted by the speed of credit decisions, improved funding chances, and lack of collateral requirements,” the 2017 report said.

Top complaints from business borrowers

Long waits for decisions and a difficult application process are the most common challenges faced by small business owners when applying for loans at banks and credit unions, according to the study. Applicants to online lenders less frequently reported aggravation in those areas, as they have in past surveys. Instead, high interest rates and unfavorable repayment terms are the most common challenges cited by business owners dealing with online lenders. Those are two areas where banks and credit unions continue to get more favorable reviews.

The latest Fed survey also found that applicants tend to choose a lender based on their chance of being funded rather than the cost or interest rate. For business owners who applied for loans through small banks, speed of decision also outweighed both product flexibility and lack of collateral requirements in level of importance.

For most banks and credit unions, the current lending process largely dictates turnaround time. Bottlenecks tied to missing borrower or financial information and the need to enter data in multiple systems can delay decisions. A credit analyst typically won’t review an application until the application and any related documents are completed, presenting a first major obstacle to a speedy decision or positive funding outcome. In fact, during a recent Sageworks webinar, nearly half of the bankers surveyed said that almost every process involved in lending takes twice as long as it should.

Addressing challenges

Growth-seeking banks and credit unions that aim to streamline the lending process and provide faster decisions increasingly are looking to:

Removing some of the friction from the existing application process as well as improving coordination among the roles involved in the approval process will enable financial institutions to provide decisions more quickly and have a more efficient organization.

. . .

To read the full article featuring Abrigo, visit Oregon Bankers Association’s Banking Matters, “Survey: Long Waits and Difficult Applications Aggravate Small Business Borrowers.”

Looking for Banker’s Toolbox? You are in the Right Place!

Banker’s Toolbox is now Abrigo, giving you a single source for all your enterprise risk management needs. Use the login button here, or the link in the top navigation, to log in to Banker’s Toolbox Community Online.

Make yourself at home!

Looking for MainStreet Technologies? You are in the Right Place!

MainStreet Technologies is now Abrigo, giving you a single source for all your enterprise risk management needs. Use the contact us button here, or the link in the top navigation, to reach product support for your MST products.

Make yourself at home!

Looking for Sageworks? You are in the Right Place!

Sageworks is now Abrigo, giving you a single source for all your enterprise risk management needs. Use the login button here, or the link in the top navigation, to log in to your Sageworks products.

Make yourself at home!

Looking for Farin? You are in the Right Place!

Farin is now Abrigo, giving you a single source for all your enterprise risk management needs. Use the login button here, or the link in the top navigation, to log in to your Farin client portal.

Make yourself at home!

Abrigo acquires construction loan management solutions

Coupled with our lending suite, Construct and +Pay from BankLabs enable end-to-end automated residential/commercial construction loans.

Read the press announcement

BankLabs Logo Abrigo Logo

Valuant is now part of Abrigo

Together, our portfolio risk solutions and services are more robust than ever. No matter the credit risk, CECL challenge, or uncertainty ahead – you can face it head on.

Read the press announcement

Valuant Logo Abrigo Logo

DiCOM is now part of Abrigo

Best-in-class solutions to manage the life of a loan and protect asset quality in the face of growing pressure on borrowers.

Read the DiCOM Press Release

Valuant is now part of Abrigo

Our portfolio risk solutions and services are more robust than ever. No matter the challenge, we help you face it head on.

Read the Valuant Press Release