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6 characteristics of advanced small business lenders

30 Nov 2023
featured 6 characteristics of advanced small business lenders

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In the fast-paced world of small business lending, technology at the forefront of the industry has become a major driver of successful teams.

Advanced small business lenders are set apart by their ability to harness these technologies, creating more efficient, accurate and customer-friendly lending processes. Integrating these tools can streamline lending operations and enhance financial decision-making.

These lenders are defined by several things – from leveraging AI for precise financial analysis to using robust fraud detection systems – meaning they are reshaping the lending landscape. This complex approach helps lenders of all kinds while providing small businesses with quicker, more reliable access to capital, fueling growth and contributing to a more vibrant economy.

how to become the best small business lender ever

Well-informed financial decision-making

For small business lenders, accuracy and depth in financial analysis are critical. 

Advanced small business lenders stand out by taking a detailed approach to analyzing borrower’s financial documents, enabling them to more accurately assess a borrower’s creditworthiness and better inform lending decisions. 

By leveraging automated technology, lenders can improve the accuracy of their decision-making in several ways, including:

  • Automated data extraction
    By automating the classification and extraction of information from financial documents, lenders can help mitigate the risk of human error and ensure a comprehensive review of a borrower’s financial position.
  • Consistent, standardized data
    Automation helps lenders maintain a consistent approach when assessing a borrower’s financial situation. Lenders can create a consistent dataset to inform their decisions by leveraging automation to organize and structure data uniformly. Standardization helps expedite analysis by enabling lenders to conduct thorough risk assessments and evaluations with greater accuracy.
  • Integration of multiple data sources
    Lenders need to know a lot about an applicant to inform responsible lending decisions. Automated technology enables lenders to easily integrate data from various sources, including document and digital bank data, to give a complete view of a borrower’s financial health. 
  • Automatic data correction and note tracking
    Document automation technology enables advanced small business lenders to create a hub of note and comment tracking throughout the life of a loan. This enables lending teams to improve collaboration and efficiency by providing meaningful context and clarification whenever needed.

Streamlined decision-making processes

Advanced small business lenders excel in making decisions in an operationally efficient, cost-effective manner, all while ensuring a positive customer experience and adhering to regulatory compliance.

Document automation technology enables SMB lenders to quickly capture, classify and analyze document and digital bank data to understand borrowers’ finances and weed out high-risk applicants.

By leveraging document automation technology to streamline processing, SMB lenders can improve the customer experience by minimizing customer friction when collecting applicant information. For example, Ocrolus gives lenders flexible options for obtaining bank data, either through Plaid or by uploading statements, whichever method is least disruptive for the customer.

Accepts a wide range of document types

Lenders need to know a lot about an applicant to make a sound, informed decision. But there also needs to be a balance between cost friction, information value and operational capacity. This stability is crucial in small business lending, where understanding the intricacies of each application is very important.

Intelligent technology like document automation enables advanced small business lenders to quickly analyze a wide variety of document types to efficiently and accurately assess the financial health of a business. 

For example, Ocrolus’ cash flow analytics standardizes data from various document types. It enriches each transaction, enabling SMB lenders to understand businesses’ financial health and get data to inform their proprietary risk scoring.

With Ocrolus’ Analyze capability, SMB lenders identify the best possible combination of approval, line size and price based on risk, profitability and how different interest rates could affect the likelihood the customer will accept the offer.

Vigilant in mitigating fraud

All lenders face fraud in their business, but advanced SMB lenders have comprehensive fraud detection strategies to prevent unnecessary risk and loss.

These lenders have developed methods to identify and mitigate potential fraud while ensuring the process doesn’t negatively impact the customer experience. This balance is critical to maintaining both security and customer satisfaction.
With automated fraud detection like Ocrolus Detect, advanced small business lenders can quickly identify potential document tampering and view a fraud score to determine if applications meet their requirements for fraud risk. From here, the Ocrolus Dashboard makes it easy for lenders to view Detect’s fraud signals, understand suspicious document edits and make fully informed decisions.

Scalable and adaptable

Advanced SMB lenders excel at being nimble, meaning they can make instant decisions in an operationally efficient, cost-effective manner and can quickly adapt to changing market and customer needs. This operational reliability is crucial in financial services, where any downtime can significantly impact both lenders and borrowers.

AI and automation are key to this sort of flexibility, improving efficiency and ensuring compliance while giving lenders the tools they need to adapt. By scaling their systems and adjusting without interruption, lenders can introduce tailored services while meeting customer demands promptly and efficiently.

Innovative and forward-thinking

Finally, innovation is at the heart of advanced small business lending. 

These lenders leverage AI to automate financial document analysis, leading to operational efficiencies like faster loan processing and less reliance on manual labor. At the same time, by automating the analysis of financial documents, lenders are able to delve deeper into financial data, offering more nuanced insights into a borrower’s financial health.

This forward-thinking approach enables SMB lenders to focus on strategic decision-making and improving customer relationships. By embracing innovation, lenders are able to support more informed decision-making and create tailored lending solutions to serve the diverse needs of small businesses better.

Learn how automated document workflows drive ROI for small business lenders with our free small business lending ROI calculator.

small business lending roi calculator

As advanced small business lenders continue integrating cutting-edge technologies like AI-powered document automation, they are redefining the lending landscape.

These lenders have several key attributes that help define their success, including a forward-thinking approach, adaptability to scale, stringent fraud mitigation, flexibility in handling diverse documents, and enhanced decision-making backed by standardized, accurate data.

By harnessing these attributes, lenders can improve their operations and provide a more secure, customer-centric lending process.

Book a demo to learn how Ocrolus can help you take the next step to becoming an advanced small business lender.

Key takeaways
  • Advanced small business lenders redefine industry standards by integrating AI and automated document processing for more accurate and efficient financial decision-making.
  • These lenders achieve a balance between operational efficiency and robust fraud detection, utilizing automated technologies to enhance customer experience and mitigate risk.
  • Advanced lenders are able to quickly adapt to changing market conditions and small business customer needs. They are equipped to handle a diverse range of documents and scenarios for more tailored, responsive financial services.