It is a feature of today’s technological landscape that almost every conceivable task has already been mechanized. Automation is one of the most widespread recent developments across all industries, from retail to dining to customer relationship management systems. It’s no different in the realms of alternative loans, finance, and fintech. At this point, loan document management software enters the scene. This helpful service facilitates more effective client cooperation and digitizes, organizes, protects, and gives easy access to the information and papers lenders need to manage the whole loan approval process.
Document Management and the Small Business Administration’s Loan Process
The SBA loan procedure is an excellent example of why a reliable document management system is crucial for financial institutions. There is a common perception that the SBA’s rigorous application process discourages potential borrowers. The Small Business Administration (SBA) has stringent lending guidelines that have lenders collect and verify reams of paperwork at every level of the financing process. The benefit is that only the best candidates for loans are approved. However, these loans are highly costly to issue, making it difficult for lenders to issue a large volume of them.
The time it takes to close on an SBA loan is highly variable, ranging from a few weeks to several months, counting on the borrower’s record-keeping practices and the lender’s chosen loan document management system. To begin the application process, SBA recommended lenders need the following documentation from applicants:-
- A detailed account of the applicant’s history, including their present and prior names, residences (both personal and commercial), criminal records, educational history, and more.
- All co-owners and business partners’ resumes.
- A formal request for financing for a company, including the sum sought, the loan’s intended purpose, and repayment terms.
- The company’s size and how long it’s been around.
- Everyone who is a part owner or partner must submit a personal credit report.
- A report on the creditworthiness of a company.
- A well-thought-out strategy for reaching one’s financial objectives and launching one’s firm.
- At least two to three years’ worth of tax returns (both individual and corporate).
- Accounts over the last two or three years (profit and loss statements, balance sheets, debt schedules).
- Catalogue of Supporting Material (if needed).
- Legal paperwork includes several licenses and permits, articles of incorporation, contracts with suppliers and vendors, car leases, and deeds to the property.
Once the borrower has submitted all of the necessary paperwork (which might take about a month), they are understandably anxious to hear whether they have been approved for the loan. The correct document management system might shave 60–90 days off the time it takes to get an SBA loan, based on the lender and the amount of the loan.
How to Choose the Best Loan Document Management Software
- Try to find a program that can prefill information in forms for you. Eliminating the need to write the same information into forms repeatedly, whether it’s for internal purposes, operational purposes, underwriter comments, or anything else, will save time and effort.
- Will the program automatically complete forms? This function expedites the closing process by populating previously entered borrower data. Furthermore, the manual process poses a significant risk of human mistakes, making robotics in document management essential.
- Electronic signatures are becoming more commonplace and vital to any loan document software system. If an integrated e-signature solution is not available, you will not be able to go paperless with your documentation.
- There has to be an automated credit memo and client profile generator in the program. Lending processes may be sped up, and communication costs lowered by automating client documents for submission to your finance committee.
Many hours may be saved at a bank by using loan document management software instead of manual file scanning and document analysis. Complying with regulations in business writing may be difficult and time-consuming. Automation in document management aids in reducing the likelihood of expensive errors, ultimately leading to loan acceptance in less time.