When it comes to hospitality lending, the credit review process can be lengthy. One major hurdle is the extensive amount of documentation the borrower must provide to the lender. Year-end and “trailing 12” income statements and projections, balance sheets, business-debt schedules, collateral schedules, global real estate schedules, ownership charts, personal cash flow reports, personal résumés —these are just some of the documents the borrower must provide for an underwriter to complete their credit review.
A time-consuming process
The effort to assemble and analyze these documents is extremely time-consuming for the credit review team. In particular, “trailing 12” statements and global cash flow reports often necessitate a great deal of manual underwriting work. And while other required documents are more standardized, borrowers’ spreadsheets and calculation methods tend to vary, so the underwriting team must spend time interpreting and analyzing them. Occasionally, required information is not readily available from the borrower, forcing the underwriter to search for it, or if provided in pieces, requiring them to put it together into a cohesive report.
How to streamline the process
The hospitality lending industry could benefit from an automated reporting tool that would streamline the credit review process. Such a tool could assemble the pieces of a “trailing 12” statement or information on the borrower’s global cash flow position and produce an automated report. The tool would be able to run reports on more basic documents, too, like income statements, the borrower’s résumé, and projections. It would then store this information in a standard format so that the borrower can present it in a professional, easily understandable format for lenders. The platform’s smart application would adjust questions to loan type, loan purpose, borrower data, and other specific information.
The CrediVia platform, which digitizes the entire loan application workflow, includes this much-needed reporting functionality. Once borrowers upload their information, CrediVia can generate reports that enable loan officers to spend far less time manually processing documents or calling various investors to collect information—thereby dramatically reducing cycle time.
Benefits for all
Streamlining the credit review process expedites the entire lending cycle and thus benefits not only lenders but all parties involved. Funding is available sooner, allowing hotels to open, operate, and begin generating profits earlier. Borrowers and lenders can spend less time gathering and processing documents, and more time initiating and closing deals. When more loans are closed faster, the entire industry—even the economy overall—stands to gain. Automation and digitization are the keys to dramatically improving the current manual hospitality lending process.