What is Commercial Loan Tracking?
Commercial loans tend to involve larger sums of money than consumer loans, which poses new opportunities and risks for banks and credit unions. Careful tracking is essential for mitigating risk throughout the entire life of the loan.
Examples of Commercial Loan Tracking
Financial institutions involved in commercial lending must track a variety of documents, tasks, and metrics. Although specific requirements vary, the following types of tracking are common among commercial lenders:
Loan Approval Process Tracking
Deciding to lend $1 million dollars to a commercial borrower typically involves a multi-step approval process. Being considerate of the applicant’s expectations while ensuring thorough analysis can seem like a delicate balancing act. Implementing reliable tracking practices makes it easier to find an approach that satisfies both parties.
Loan Covenant Tracking
Loan agreements contain covenants that define what a borrower must do (i.e., maintaining adequate insurance on a collateralized asset) or must not do (i.e., refusing an inventory inspection). To ensure compliance, banks and credit unions may need to routinely follow up and complete required actions. Requesting borrowers’ annual financial statements and tax returns is a common example.
Collateral Tracking
Financial institutions take great effort to ensure collateralized assets have been perfected. Perfecting certain types of collateral, such as inventory or business equipment, may involve filing UCC financing statements. UCC filings eventually expire, which necessitates prompt action to avoid critical exceptions. Loans involving cross-collateralized assets introduce additional complexity.
Tools Used for Commercial Loan Tracking
Banks and credit unions often rely on a mix of commercial loan tracking solutions, including:
- Paper loan files and checklists
- Spreadsheets
- Ticklers
- CRM (customer relationship management) software
- LOS (loan origination system)
AccuAccount, Alogent’s ECM (enterprise content management) software that’s optimized for commercial lending, consolidates tracking into an intuitive solution. Built-in, real-time exception management simplifies tracking and reporting across loans, credit, collateral, and more. In addition, AccuApproval for AccuAccount offers a scalable, electronic routing and approval workflow.
Contact Alogent to discuss commercial loan tracking. Visit the Innovation Hub for additional free resources.
