Commercial Loan Imaging
Financial institutions rely on commercial loan imaging to scan, save, and organize information about their commercial borrowing relationships. Although similar and related to credit document imaging, commercial loan imaging pertains more specifically to the management of loan and collateral documentation. Given the ongoing need to assess commercial borrowers’ creditworthiness, some bankers may use the terms interchangeably.
Reasons Why Commercial Loan Imaging is Unique
Compared to consumer lending, commercial lending teams have several unique circumstances that influence their imaging practices:
- Large loan amounts: Generally speaking, commercial loans tend to involve larger sums of money than a typical car loan or debt consolidation loan. Although larger sums represent sizable opportunities for financial institutions, they also pose greater risk in the event of nonpayment. Maintaining proper documentation is key for mitigating risk.
- Complexity: Commercial loans can be rather complex, such as when a farmer pledges crops or cattle as collateral for an equipment loan. Perishable items, such as grain and livestock, do not have a title that can be held by the bank or credit union. UCC filings and regular collateral inspections generate new paperwork, which must be stored and managed.
- Market dynamics: Business interruptions, inflation, monetary policy changes, and economic downturns can cause unexpected cashflow issues for even the healthiest organization. Unlike consumer loans, which are largely influenced by personal credit scores, commercial relationships require additional monitoring and documentation to guard against risk.
- Audits and exams: Auditors and examiners commonly request to review large commercial loans. Institutions must be ready and able to provide commercial loan information in a convenient, intuitive format.
Commercial Loan Imaging Challenges
Financial institutions face a number of challenges that can inhibit the efficiency and effectiveness of their commercial loan imaging workflows:
- Ensuring proper tracking of documentation requirements, which varies based on the relationship, loan type, and pledged collateral.
- Managing and reporting on crossed collateralized loans, such as when a manufacturing company uses its factory as collateral to secure multiple loans.
- Legacy imaging systems that organize documentation in an “account-based” hierarchy, making it difficult for staff to view all documentation related to a specific borrower.
Implementing a modern commercial loan imaging solution helps alleviate many of these challenges. For example, AccuAccount from Alogent offers flexible scanning capabilities, exception tracking and reporting, and an interface that “looks like” a traditional loan file. Users can easily find commercial loan documentation, scan and upload new documents, generate notices, and prepare for audits.
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