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In today’s rapidly evolving lending market, the challenges are numerous, especially when it comes to maintaining up-to-date records of borrowers’ assets and collateral. The hurdle becomes even steeper in cases involving loans with lengthy approval cycles, like commercial real estate loans and specific Small Business Administration-backed loans. While most banks and commercial lenders use document management systems, often known as “Imaging Systems”, these are typically only utilized post-funding. This situation results in a consistent struggle for commercial lenders in effectively capturing, storing, and managing documents during the origination process. The cumbersome and time-intensive nature of manual document management processes during origination and underwriting is evident on both sides: the borrower and the lending institution. It comes to light as staff spend valuable hours working on the document management process, which includes tasks such as assembling initial documents, transferring these to advance the application, ensuring timely receipt and action upon documents, and locating missing ones – a situation that invariably slows down the underwriting process. Moreover, the risk of approving loans based on outdated data without a comprehensive understanding of the borrower’s income or sufficient collateral is a significant concern. So, where should institutions turn if a document management system isn’t deployed until post-approval and funding?

Optimizing the Document Management Process During Origination.

Banks should examine their document management processes, pipeline management, and underwriting procedures to plug any gaps in compiling, evaluating, and updating borrower information. This point is particularly critical for those relying on basic tools like Excel spreadsheets for loan origination. The solution lies in embracing a comprehensive document management system, such as an all-encompassing origination and document workflow platform that offers:

• Secure document collection: aiding your credit team in gathering borrower documents from one or more borrowers, all while integrating with your underwriting process.

• Loan origination and pipeline management: supplying extensive information on each loan including its status, latest updates, notes, tasks, workflow, and reporting.

• Document Management and Integration: the right document management software can ease the burden of sending origination documents directly to your current imaging system, eliminating the need to download and re-upload files.

Automating Origination: The Game-Changer

Embracing streamlined practices and resilient controls can significantly expedite the origination process. Document management automation plays a crucial role in consolidating paper and digital documents in one place as physical documents get scanned and digital ones are imported.

The benefits of document management automation during loan origination include:
1. Providing borrowers with a secure document checklist for easy document uploading directly into the document management software.

2. Easing the storage, organization, and retrieval of application-related documents through automated workflow.

3. Enhancing collaboration and simplifying credit decision-making by enabling users to share and work on files and documents, irrespective of their location or line of business (deposits, loans, treasury, etc.)

Unblocking the Origination Pipeline: Key Automation Features

Although the features of document management systems can vary among providers, the following are critical:

• User-friendliness for both borrowers and lenders: Borrowers should be able to upload documents via an intuitive interface on any device, and the lending staff should find the document management solution easy to use. A complex system may hinder staff adoption, leading to operational disruptions.

• A dynamic automated workflow that respects your credit policy: Some document management solutions can be tailored with rules to ensure compliance with your credit policy at every stage, while providing an audit trail for auditors and examiners.

• Seamless integration with your existing imaging system, eliminating the need to manually upload documents and rekey document metadata and indexing information.

Other document control features to consider:

• Support for standard document types (Images, PDFs, Word, Excel, etc.)

• Flexible smart checklists for precise document collection

• Borrower reminders to speed up the document management process

• Virus scanning of all inbound digital documents

• The ability to create a shareable document package in a single PDF, with thumbnails for each embedded document, to aid in sharing the loan package with third parties.

In an increasingly digital and fast-paced financial landscape, simplified document management during commercial loan origination is no longer a luxury—it’s a necessity. Leveraging an integrated document management system during the origination process is a critical step towards simplifying the traditionally complex and time-consuming procedures. Embracing automation in document management using an effective document management solutions will lead to a more efficient, compliant, and customer-friendly operation—a winning combination in today’s competitive banking environment.

If you liked this article, consider: Streamlining Your Commercial Loan Pipeline.