Best Practices in Commercial Lending

Business owners looking to cover operational costs tend to opt for a commercial loan, which covers these costs over time. They can also use these loans to pay for other day-to-day business expenses or big projects like refurbishment. Banks and private lenders alike make these loans, but so far in 2018 there has been a cooling in the lending economy.

Marketwatch has reported that, due to heavy competition in the market, banks have eased up on commercial lending in 2018. With this in mind, it only helps to see how banks can reassemble and reconfigure the best practices in commercial lending including how to nail down regulations.

Straight-Through Processing

Due to the lack of integrated credit processes data quality has been affected as well as revenue, capital deployment, cost, and risk. Commercial lending banks need a good refresher in being more diligent about processing, doing better to save against potential failures.

Straight-through processing of loan applications brings in a more streamlined automation of tasks and elimination of redundant data entry. In turn, this can also take some grunt work off of employees and opens up the opportunity for more efficient and effective productivity.

Make Sense of Complying

The only thing consistent about lending regulations is that they’re always inconsistent. Movement in these regulations pose challenges to lenders trying to get a foothold. Having the right lending platform can help to cater to the assimilation of regulations across lending departments. Custom reports can be generated and can simplify the download of audit information from data stores. What does all this mean for lenders? Readiness when it comes to regulations.

Have Insurance in Order

Some lenders don’t fully appreciate the support that solid liability policies offer. Liability insurance for bankers protects against allegations of breaches of trust inside the bank as well as mis-selling financial products. The latter has gotten a lot of attention in recent months with some major U.S. banks having to completely reconfigure their entire platforms and business models. Having liability insurance already in order can help safeguard a bank in the event of a controversy.

Make Use of Legacy Systems

Legacy systems limit the capabilities of banks to handle the load of data volume. A well-oiled commercial lending solution encourages lenders to put in motion seamless communication within its technologies. Banks can enhance the life of legacy systems while keeping costs down and complying with regulations.


About Financial Guaranty Insurance Brokers

Since 1983, Financial Guaranty Insurance Brokers has distinguished itself as a provider of Professional Liability, Cyber Liability, and Crime insurance products for entities of all types. To receive timely, personalized service from a knowledgeable and experienced staff, call us today at (626) 793-3330 to speak with one of our professionals.