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Written by Cyndie Martini
on June 21, 2017


Assessing a loan applicant correctly and strategically is crucial to making smart lending decisions. Though you want to help your small-business members succeed, it's also important that you're not taking on more risk than is healthy for your credit union.

To manage risk, you likely take time to review small-business loan applications. It doesn't take long - many a few days - but as technology changes, many small-business owners have discovered that larger financial institutions can make faster decisions.

Nimble lenders, as they're called, are able to auto-approve applications and can operate entirely online, FICO explained in a press release. Small-business owners require fast decisions so they can move forward with their plans. Because of this, they may pass over credit unions in favor of these quick-approval lenders, regardless of the credit union's experience in lending or borrowers' relationships with these institutions.

"Lenders lose out on new customer opportunities when they cannot meet small business borrowers' requirements for a quick decision," Christine Pratt, senior analyst at Aite Group, said in a press release from FICO.

Improving small-business loan decisions

In response to this growing problem more credit unions face, FICO developed Origination Manager Essentials, a product that uses analytics and cloud hosting to make small-business lending decisions faster and easier for credit unions and other small financial institutions.

With this new product, small and mid-sized financial institutions can make small-business lending decisions in a minute's time or less. Origination Manager Essentials is designed to level the playing field, allowing credit unions to make decisions as quickly as big banks that have invested in new technologies.

"Mid-market lenders play an integral role in supporting small businesses' growth and development," Tim Van Tassel, FICO credit lifecycle business line vice president, said in a press release. "With many new entrants providing loans to small businesses, it is crucial that lenders can improve speed and customer service, while maintaining strong risk assessment across their portfolios."

Additional benefits of Origination Manager Essentials

In addition to making faster lending determinations, the technology can also make the credit union's lending process more efficient in terms of data entry and processing. It also takes away the potential for human error to negatively impact a loan decision.

FICO explained the solution will lower the operational costs related to staying compliant because the system makes purely objective decisions based on information provided in the loan application.

The FICO® Small Business Scoring Service, an important aspect of the program that enables decisions to be made quickly, uses data from consumer and commercial sources to determine the risk of an application, PYMNTS reported. This gives credit unions the ability to important access data they wouldn't have access to otherwise.

"Origination solutions that speed up decisions while answering the institution's need for transparency and credit risk management are well positioned to gain happy customers and loan share as the market improves," Pratt explained in a press release.

As new technologies allow big banks to offer attractive loan options, it's important that credit unions do everything they can to remain competitive. The ability to give small-business lenders fast answers about loan decisions is one way to achieve this.

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