The continued evolution of technology and the explosion of online small business lenders has many mission-driven lenders, CDFIs and CDFI banks, searching for ways to compete and remain viable.
Small business borrowers have a ton of options and expect a quick and seamless experience. On the other hand, the number of different types of loans and the variety of terms make it difficult for borrowers to determine if they are getting the right loan for them let alone whether the terms are reasonable and responsible.
As mission-driven lenders, we must compete and expand our markets in this new environment, not only to protect the rights of the borrowers we serve, but also to survive and thrive.
New Borrowers Bring New Opportunities For Lenders
Born in the age of instant communication, smart technology, and a hyper-connected world, Millennials continue to require digital transformation in every industry, including small business lending.
Millennials currently represent the largest share of the US Labor Market and are rapidly moving into senior positions. They are becoming the leaders of today and tomorrow, and their economic power and influence can’t be ignored. Millennials are starting more businesses, too. Studies show that Millennials are starting 1 ½ more new businesses than any other group and are also acquiring businesses owned by the Boomers as they retire.
The good news is that there is tremendous opportunity with this demographic because Millennials are more likely to align themselves with businesses and organizations that put purpose above profits. A study conducted by Wharton Fintech found that 89% of Millennials demonstrate a stronger likelihood to buy a product from a company with a social or environmental mission.
As mission-driven lenders, we have tremendous opportunity with this demographic as long as we are willing to embrace technology like loan origination software as a way to deliver the experience they demand in a fast and efficient way.
A mission-driven small business lender we didn’t just build Spark, we also use it every day. Based on a process engineered and improved over 20+ years of small business lending, Spark has helped us improve our productivity by more than 40%!
By sharing Spark’s powerful loan origination capabilities with other mission-driven lenders, we help others bring the process online, which leads to a number of benefits including:
- A competitive advantage by being able to leverage technology while offering borrowers more responsible terms than alternative lenders
- Enhanced customer experience because borrowers can control how and when they interact with their small business lender
- Quick pre-approval before submitting a full online loan application provides better customer experience and improved productivity for the lender
- A more efficient and productive process leads to better customer experience and engagement for the borrower and improved productivity for the lender
- Customization of lending software means lenders can imbed the unique aspects of their lending activities into the tool
- An end-to-end lending platform allows loans to be processed efficiently and consistently
- Compliance risk is minimized because all rules and procedures are programmed into Spark, meaning you gather all the information you need, when you need it.
Top three questions to ask about any loan origination software:
- What does end-to-end mean? Can I use one system from pre-qualification through disbursement and even on to selling the loan on the secondary market if applicable?
- What experience do you have in the actual “hands-on” small business loan origination?
- How does your system ensure that all borrower information is secure?
Who are Millennials?
- Millennials were born between 1981 and 2000.
- There are roughly 80 million of them in the U.S.
- They currently make up 39% of the US workforce and by 2020 that will grow to 50%.
- 23% have a Bachelor’s degree or higher (making them the most educated generation)
- Only 21% are married, while 42% of Baby Boomers were married at their age