😷Before the pandemic, commercial and business lending was slow and tedious compared to the speed and efficiency of Fintechs and modernized banking companies.
However, once the SBA’s Payment Protection Plan (PPP) Rolled out, over 14 years’ worth of loans were distributed in a mere 14 days.
The PPP had a simple 2-page application, and banks worked with thousands of businesses to ensure they quickly received their funds.
The monumental scale of the PPP set the precedent that large loans can be processed and distributed safely, securely, and digitally.
🔑 Today we will discuss how the digitization of commercial lending enhances the process for buyers and sellers and ultimately paved the way for the future of commercial real estate loans.
📅 New Developments Have Shortened Loan Cycles From Months To Days
Traditional lending required thousands of papers shuffled back and forth between borrowers, lenders, and intermediaries to verify creditworthiness, negotiate terms, and eventually close.
The pandemic created an inability to conduct in-person meetings and made dealing with paper files more dangerous than handling the documents digitally.
While there was a learning curve for many commercial lenders, borrowers realized that most of the loan cycle process could be handled online once the PPP funds were distributed.
Many commercial lenders have acknowledged an unprecedented increase in digital loan applications, with some reporting over 80% of new loan inquiries being digital versus a mere 10% prior to the pandemic.
⏰ Since digital lending is so much faster than traditional paper applications, tech-forward lenders can offer online applications that can be completed within minutes and ultimately have a credit decision between 24 and 48 hours.
✅ Faster Closing Times Streamline Due Diligence And Reduce Errors
Digital lending reduces clerical errors because data entry no longer requires paper applications or messy document uploads.
Loan officers can process many more loan applications by implementing digital systems that help them screen applicants without putting excess strain on their team.
✍️ Algorithms and AI Enhance Underwriting Procedures
Underwriting commercial real estate loans require an extensive amount of experience and data. Thankfully, modern AI and algorithmic analysis help fill in gaps that would otherwise be overlooked during the underwriting process.
For example, automated underwriting technology can quickly draft a rough outline of a loan by utilizing data from the application and remove tedious and redundant work from the loan officer.
When the outline reaches the loan officer, the loan officer can spend more time analyzing the application instead of wasting precious time on data entry.
These automated processes save time and enable the new lender to process applications more quickly and ultimately provide a decision faster than ever before.
Believes Technology-Driven Lending Improves The Borrowing Experience From Start To Finish
👉 Technology enables borrowers to submit applications efficiently and securely, and thanks to the example set by the PPP, more commercial lenders have shifted to digital lending than ever before.
👉 RealAtom has had boots on the ground developing the best software platform for securing CRE loans because we give CRE professionals who are looking for a commercial or multifamily loan a set of tools, data, and resources they need to get the best loan for their investment.
👌By offering a two-sided, robust digital lending platform to lenders and their clients, RealAtom strongly believes in the future of digital lending in the CRE market. Momentum only continues to increase as traditional lenders play catch up by implementing online lending capabilities and lay the framework for the future of lending.