How An Inefficient Loan Application Process Can Undermine Relationships


As the world becomes ever more digital, commercial real estate lending is lagging behind in digitizing its processes. As our recent white paper explores in detail, the commercial real estate lending process is highly manual, paper-driven, and slow. Plagued by inconsistency and inefficiency, the process is vulnerable to errors and miscommunication among participants, particularly the lender and borrower. Such miscommunication can test the borrower-lender relationship from the start, and often leads to a strained or even fragmented relationship in the end. This is a particularly unfortunate outcome in the financial services industry, which is built upon trusted relationships. What is needed is a digital solution that streamlines the lending process and transforms it into a collaborative effort toward mutual success.

Inefficiencies and roadblocks

Before approving a commercial real estate loan, a lender must collect a vast trove of data on the loan applicant and his/her affiliated entities. Most lenders collect borrowers’ application data initially through paper forms and then request any additional information needed via phone, email, or text messages. Borrowers work off a checklist of required documents that must be delivered via email, Dropbox, or old-fashioned snail-mail.

Because this stage of the process involves so much back-and-forth communication, opportunities for miscommunication are plentiful. The back-and-forth also extends the loan proposal and underwriting cycle times, which may frustrate the borrower and create tension in the relationship.

To further complicate matters, borrowers usually submit applications to multiple lenders, and while most lenders want the same basic information from the borrower, they often want it in their own application format. Having to present the same information repeatedly in different formats raises the probability of errors. Needing to correct information and then wait for updates extends the application cycle even further and may heighten existing tensions.

The process can be frustrating for lenders as well. Static, paper application forms cannot efficiently capture all of the information needed for a commercial real estate loan, nor can they be customized to eliminate fields that are not applicable to the borrower. Borrowers, then, often leave fields blank, provide incomplete data, or simply write “see attached” on the application and staple their relevant documents to the form. The lender then has to sift through the data to determine what is applicable to their lending decision.

Not surprisingly, lenders can become overwhelmed by all of this paperwork and may not have time to keep borrowers updated on the status of their applications. Borrowers may then begin to feel that they are being ignored, and that they have no control over their transaction—further exacerbating any existing friction between borrower and lender.

Beyond the borrower-lender relationship, relations among other stakeholders can become tense as the loan process drags on. The process requires a great deal of collaboration among project team members, including (but not limited to) owners, management companies, contractors, accountants, lawyers, and architects. Typically the only way for these outside groups to work directly with the lender is through phone calls or emails. The borrower often has to take on a coordinator role to ensure that the right people receive the right information. Keeping everyone updated can be a complicated task.

A digital solution is needed

What the commercial real estate lending process needs is a digital solution similar to the “Common App” used by the American higher education system. With the Common App, student applicants fill out a single, standard college application online and then submit it to multiple institutions simultaneously. Like the student applicants, borrowers could determine what types of lenders would receive their applications based on specifications such as loan type and loan purpose. Lenders would then receive only the applications that meet the loan criteria they established from the beginning. Such a solution would present application data in a consistent format, reducing errors and opportunities for miscommunication. It would enable greater transparency for the borrower, help the lender to track the loan process and keep stakeholders up to date, and ultimately expedite the decisioning process.

A digital solution for commercial real estate lending would greatly streamline the process from end-to-end. The frustrations piqued by miscommunication, errors, incomplete information, delays, and erratic updates would be alleviated, if not eliminated - making for happier relationships among borrowers, lenders, and the entire project team, leading both borrower and lender to mutual success.


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