Automated-lending – Faster funding for SMEs

Written by Nigel Simpkins

During these testing economic times, it’s more vital than ever that SMEs are able to access the extra liquidity that they need to keep the wheels of business turning. Now that lenders are automating their decision-making process, this extra funding can be delivered more quickly to where it’s needed.

Why is faster access so critical?

A lack of liquidity can spell the end for modern businesses with barely any cash reserves. An unexpected disaster, a non-paying client, or a downturn in sales, can leave a business unable to pay its staff. Without adequate liquidity to hand, the business may have to go through the painful process of selling of assets, or laying off staff. When weighed against these possibilities, the cost in interest of a loan becomes a great deal tolerable.

How Does Automated Lending Work?

In urgent situations, a quick decision is hugely valuable. As such, companies like Nucleus Commercial Finance have taken some of the administrative burden away from real people and placed it upon machine-learning algorithms. These pieces of code have been trained on thousands of applications, and are authorised to underwrite loans of up to £250,000. This includes loans offered through the government’s Coronavirus Business Interruption Loan Scheme (CBILS).

Automation confers several distinct benefits. At the top of the list is the speed at which an application can be processed. A machine can assess hundreds or even thousands of documents in the time it takes a single person to study just one.

The consistency of analysis is also worth considering. And automated lending process will assess each document with the same level of scrupulousness. This in turn leads to more reliable results. Automated software can provide an at-a-glance view of the documents worked through, and provide a simple means for a human being to run through the paper trail, and identify any documents which have been flagged. This contrasts with the manual equivalent, which, however organised the loan officer, can be time-consuming and difficult to parse.

Finally, there are benefits which apply only to the lender. For example, automated software makes it easy to scale the service to demand, and reduces the workload on the human workforce. A side-effect of the thoroughness of an automated check is that it is excellent at identifying and exposing fraud. If there is an inconsistency across the available documentation, like a mismatched National Insurance number, then it will be identified and investigated.