Loan Approval Process Workflow
In banking, a loan approval process workflow includes those steps undertaken by a financial institution to approve a loan. Specific steps vary depending on the financial institution’s loan policy and type of lending activity, but credit analysis and underwriting are examples.
Spotlight on Commercial Lending
Commercial lending is an important topic of conversation for financial institutions seeking enhanced loan approval workflows. Optimizing commercial loan approval can be particularly challenging due to:
Breadth and Depth of Commercial Relationships: Financial institutions serve commercial clients across a broad spectrum of industries and sectors. Another relevant factor is organizational size, which could span from one-person startups to multinational corporations.
Diversity of Commercial Lending Products: Commercial real estate loans, SBA loans, equipment lending, and business lines of credit are just a few examples.
Business Loan Amounts: Financing the construction of a new factory likely involves millions of dollars and multiple pieces of collateral.
Credit Analysis: Unlike individuals, most businesses do not have a readily accessible credit score. As a result, financial institutions must analyze a variety of considerations when making commercial lending decisions.
Two Common Workflows for Commercial Loan Approvals
Financial institutions generally employ one of two workflows for commercial loan decisioning and approvals:
Traditional paper-based workflows, which usually involve storing and routing customer and loan documentation in hard copy file folders. Courier services and manual tracking processes are prevalent with this approach.
LOS workflows, which rely on loan origination system (LOS) technology to electronically manage credit analysis, loan narratives, document preparation, and other parts of the approval workflow. LOS-based workflows tend to be more efficient than paper-based approaches, but upfront and ongoing software licensing fees may be cost prohibitive for smaller institutions.
Seeking a “middle ground” between these two workflows, some financial institutions use AccuApproval—Alogent’s loan approval solution for AccuAccount. AccuApproval turns loan approval into a straightforward, digital process while offering budget-friendly pricing. Financial institutions can also connect our software to their existing LOS platform for enhanced capabilities.
Request information about AccuApproval or browse additional banking definitions.
