Today, let’s take a deep dive into the evolution of business loan applications—a journey that affects both lenders and businesses.
Understanding how loan applications have recently changed helps lenders streamline their process and enables businesses more easily access necessary funds.
Archaic Era: The Initial Challenge
In the beginning when tech was first introduced to the loan application process, it was a bit of a free-for-all. Lenders and businesses grappled with unstructured communications, important documents often disappeared into digital black holes, and security measures were minimal.
This chaotic system made it difficult for lenders to manage applications efficiently and for businesses to track their loan statuses. The time commitment was expensive, taking longer to get a loan funded and many businesses simply skipped the process altogether if they could avoid borrowing.
Basic Tech Era: Steps Toward Structure
As technology advanced, so did the structure of loan applications. The introduction of document room-style software allowed businesses to upload and manage their documents in one central location.
This was a significant improvement, making it easier for lenders to access and review necessary documents without sifting through endless emails. Unfortunately without much focus on UX, communication often still shifted back to email.
Later the ability to discuss these documents directly within the platform also facilitated clearer communication between lenders and businesses. This was pushed forward by the increased quality of messaging software and uptake among generations that typically run businesses.
The Modern Era: The Rise of APIs (Today)
The integration of APIs marked a major leap forward. This technology enables businesses to connect their existing financial accounts to the loan application process, allowing for automatic form population and reducing errors from manual data entry. For lenders, this meant receiving more accurate and complete upfront application data, and it significantly speed up the time it took for decision-making.
However, this solution really got traction when MCA and more simple lending products became popular as it’s not unusual for these approvals to be supported from just a few data factors. Also the direct connection that often raised concerns for business owners for security liked providing less data since they tended to shy away from lenders looking directly at bank accounts.
This reluctance highlighted the importance of using a trusted third-party service like Levr.ai to ensure secure and efficient data review rather than a direct API. This era also opened the ability to auto generate documents and there’s still a lot of progress being made here.
The Future: AI and OCR Take the Lead
Looking to the future, the potential of AI and OCR technologies are gaining interest. These tools promise to simplify the application process more by automatically extracting information from uploaded documents and accurately filling out applications.
For lenders, this means even faster processing times and fewer errors, which could dramatically improve approval rates and customer satisfaction. It also gives the ability for AI powered support throughout the application process (hint hint).
Why This Matters for Lenders and Businesses
For lenders, understanding and implementing these technological advancements can lead to more efficient operations, better security, and a competitive edge in the market.
For businesses, these improvements provide easier access to financing, less time spent on tedious application processes, and more time focusing on running their business.
At Levr.ai, we recognize the importance of tech and its ability to evolve the way the industry does loan applications but also that how it applied to the users- experience is really what makes the difference in getting loans funded.
Our solutions are designed to bridge the gap between lenders and business and respecting the traditional processes while ushering in future innovations from emails to advanced AI Character recognition our team has seen it all.
