7 Questions You Must Ask a Business Loan Origination Software Vendor Before Deciding

The result is a streamlined LOS workflow that:

• Automates document aggregation and management
• Minimizes credit risk and decision times
• Simplifies complex regulatory compliance
• Strengthens relationship-led lending
• Increases profitable loan approval rates
• Enhances the customer experience
• Boosts bottom and top line

However, small community banks lack awareness, education, and negotiation tactics to adopt digital lending solutions that ensure ROI. A business lending solution that covers you fully through the lifecycle of each loan delivers tremendous value. However, lending platforms vary and not just in pricing. They vary in API integrations, AI-driven technologies, configurable dashboards, and financial analysis tools.

How to identify the best-suited loan portfolio for your financial institution

The digitalization of loan origination offers many opportunities to streamline your commercial banking business and make it more agile and profitable. But it’s essential to look under the hood of each loan origination system. You will find these five top features in a loan origination system that competitive fintechs leverage to maximize their digital lending market share.

1. AI-powered automation
2. Seamless integration ecosystem
3. Composability without coding
4. Omnichannel experience
5. Automated compliance & Security

These business loan origination software features will help your loan officers and underwriters make informed decisions. While it helps ensure the latest technologies are available in your new lending solution, there’s more clarity to seek. We’ve compiled a list of questions you should ask your vendors when evaluating a business loan origination system.

Question #1: Can the business loan origination system simplify our complex lending process?

Before asking, examine your unique loan origination process end-to-end. Make a list of all the tasks you perform, from onboarding and account opening to credit decisioning and loan servicing. Share the details with your vendor to help them provide an accurate answer.

It helps understand whether the LOS you’re considering succeeds in enhancing each step of your loan origination process. It should simplify the loan application process, document management, data entry, underwriting, risk assessment, decision-making, and loan management. Take a hard look at the platform's features to be sure it will support each of your needs.

Question #2: Is the business loan origination software configurable?

You’ve been running your business for quite some time. Along the way, you’ve relied on multiple digital banking and siloed software to achieve your goals. The data you’ve amassed across loan products is priceless. Your CRM system is critical to your efficiency, for example.

The right business loan origination software will integrate with your legacy systems and provide easy access to your existing databases. It won’t disrupt policies that are working for you. It will seamlessly reflect your policies and the brand that attracted borrowers to your company in the first place.

Bear in mind, configuring isn’t the same as customizing. Configuring is something you can do on your own, as many times as you need to, with minimal support and, perhaps more importantly, zero expense. Take the time to question solution providers. Make sure you fully understand how much flexibility is included in the “standard” and what an “add-on” is that will cost you more time and money.

Question #3: Will the business loan origination software function across our entire loan portfolio?

Small community banks and fintech lenders offer a range of products. You may be offering equipment loans and business lines of credit today. But your next big opportunity could be in commercial real estate financing. It’s easier to attract repeat customers when you have the capabilities they need to support them as they grow.

Make sure any business loan origination software you’re considering can support all sectors of your business. It should afford you the option of scaling on-demand to new loan products down the road. A business lending platform’s ability to scale with your business quickly and easily will always hold the door for rapid growth open.

Question #4: What can your business lending solution do to enhance our customer experience?

The ideal business loan origination system can make borrower journeys frictionless and offer top customer experiences. Consider what modern borrowers value most when comparing lending solutions. Speed is a top priority for customers. So, find out how fast your customers will be able to complete a loan application.

Complete transparency is another attractive feature for modern small business owners. Can they track the progress of their loans in real-time? The business lending solution should keep them in the loop through the underwriting and credit-decisioning stages of the lending process.

Small businesses lack time and seek flexibility to operate. They want to be able to fill out forms and upload supporting documents from anywhere. The business loan origination software must offer an omnichannel experience for them to operate on the go. A device-agnostic, cloud-based business lending solution can offer these capabilities.

A business lending platform should duly educate borrowers about the loan covenants they’re agreeing to. Tech-forward fintechs have adopted artificial intelligence to tackle these challenges. An AI-powered chatbot can provide continuous guidance to borrowers, making complex processes easy.

Question #5: Does the business loan origination software deliver best-in-class risk management?

Without accurate credit decision-making, small banks cannot serve small businesses. And the more accurate your decisions are, the more profitable you can be. Your business loan origination software should support a profitable underwriting process for your institution. To do that, artificial intelligence has become the most preferred tool for large fintechs globally.

The best business loan origination software uses AI to draw data from a wide range of sources, including traditional and alternative credit bureaus, bank records, and tax returns. From identity and income verifications to reliable collateral valuations, they cover all the bases. Because small businesses lack historical evidence of their credibility, AI tools can help provide alternative data from repayment behavior, business cash flow trends, and local economic forecasts. And by doing so, they can set the stage for accurate automatic approvals, saving time and overhead costs.

Question #6: How long will implementing the new business loan origination software take?

Installing any new system is bound to be a little bit disruptive to your business. This can add up to a significant chunk of revenue for small community banks. The implementation usually depends on your existing lending process. Note down all the technologies your financial institution currently uses. It will help your vendor clarify whether you’re traditionally driven, can keep any existing technology, or need a complete revamp.

Complete revamps are more straightforward and less time-consuming than others. The only time-consuming part is moving data securely to cloud servers and populating it on the new dashboard. Integrating new technologies with an existing system takes more time. Here, the integration-readiness and established ecosystem of the business loan origination software help save time.

When comparing business lending platforms, be sure to ask each provider about their integration network, check if your existing technologies are included or not, and the add-on costs of integrating with them.

Get a firm idea of who in your organization will be required to participate in the implementation and how much time each of them will be required to commit to the project. Take the time to prepare all stakeholders for the transition and get their buy-in to ensure a fast go-to-market.

Question #7: How long will it take to see a return on our investment?

Business loan origination software platforms vary in cost. Pricing is typically based on a one-time implementation fee and ongoing subscription fees based on the number of platform users. For example, cloud-based solutions may have ongoing technology or hosting costs for which you should account. However, due to the nature of the technology, on-premises solutions typically have very high installation and maintenance costs.

You will gain efficiencies and see higher profit margins once you’re up and running on a cloud-based platform because you’ll be able to process loans more quickly and price them more accurately. But the question remains—how soon will you break even on your upfront investment? What will be your ROI on your monthly subscription costs? Business lending platform providers should be able to predict your break-even point based on your loan volume and the data they’ve collected from other customers over time.

Biz2X has built a comprehensive ROI calculator to help such organizations predict how soon their investment can break even or become profitable. You can click here to check the Biz2X ROI calculator.

Each Answer Makes Business Loan Origination Software Implementation Better

Ask each platform provider you are considering these key questions, and you’ll be on the path to making an informed buying and implementation decision. Plus, you will have ample evidence to support your business case when you present to your executive team about the opportunity for bringing in a business loan origination software.

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