Uncover key tactics to broaden your commercial lending offerings and successfully engage with the expanding SMB market for greater growth opportunities.
Expanding commercial lending practices is a top priority for financial institutions looking to drive growth and respond to evolving market needs. Recent data highlights this trend — 78% of financial institutions plan to expand their small and medium business (SMB) services within the next two years.
This focus on commercial and business lending reflects a growing small business sector, particularly in online lending. For example, the Federal Reserve’s Small Business Credit Survey reported a 24% increase in online lending across all categories in 2017, indicating an industry-wide shift toward internet-driven lending.
Small business lending offers a valuable growth potential for financial institutions. Entrepreneurs are increasingly seeking fast, flexible funding options. To stay competitive, lenders must adopt best practices that align with client expectations and market trends. By doing so, they can establish themselves as trusted partners for SMBs while scaling effectively.
This blog explores fundamental strategies to help your institution expand its commercial lending services and tap into the dynamic SMB market.
Start by identifying specific SMB sectors showing significant growth in your market. For instance, minority-owned businesses are seeing unprecedented increases in funding. In fiscal year 2024, the Small Business Administration (SBA) backed 5,200 loans totaling $1.5 billion to Black-owned businesses — a threefold increase from 2020. Additionally, 9,600 loans worth $3.3 billion were provided to Latino-owned businesses, reflecting a 2.5x increase over the same period. These trends indicate a growing demand for financial solutions tailored to minority-owned enterprises.
Next, identify underserved industries or customer segments where your institution can provide targeted lending solutions. Women-owned businesses and rural SMBs often face challenges accessing capital, creating valuable opportunities for specialized offerings.
You also need to understand the competitive landscape. Evaluate your competitors’ lending programs to uncover gaps — such as slow approval processes or limited digital services — that you can address to stand out.
Lastly, assess local economic conditions that impact SMB growth. Key factors include:
Using this data, you can develop proactive lending strategies tailored to your market’s unique needs.
Expanding your commercial lending practice starts with a deep dive into your operational infrastructure. Start by assessing whether your current loan origination system can handle an increased volume of commercial loans. A well-designed system will simplify application processing, credit analysis, and approval workflows — without recurring bottlenecks.
If your infrastructure falls short, consider upgrading or integrating new technologies to streamline rote tasks like:
Advanced tools — such as digital portals and centralized dashboards — can significantly enhance your institution’s ability to handle complex commercial lending operations efficiently.
Automation should be your next area of scrutiny. Evaluate your capacity to automate routine tasks such as data entry, credit checks, and document verification. Automation can reduce errors and accelerate processing times. For example, financial institutions using intelligent automation have reported cost reductions of 30-40% in many processes.
Finally, review your capacity for scaling. Ensure your systems, staff, and processes can grow without sacrificing quality or customer experience. By proactively addressing these areas, you position your institution to meet growing demand while maintaining operational excellence.
To expand your commercial lending practice, you’ll first need a team well-prepared and equipped to handle new challenges. Start with training and education to ensure your team understands new lending products, SMB-specific needs, and emerging market trends.
Equip your staff with the skills to use advanced technologies, including:
While employee training does cost time and money, the results are significant. Studies show that comprehensive training programs can increase employee productivity by 25% — driving an additional $20,100 in productivity value per user.
Next, assess your current staffing to identify gaps. Consider talent development initiatives to upskill your team or bring in specialists with expertise in areas like commercial lending, risk assessment, or credit evaluation. Temporary consultants can also provide targeted expertise during critical phases of expansion.
By equipping your team with the right tools and knowledge, you can create an agile workforce ready to deliver exceptional service in a growing market.
Expanding into new markets introduces new risks. Begin with a comprehensive credit risk assessment process. Advanced credit modeling tools can help your institution evaluate borrowers' repayment capabilities accurately. Using predictive analytics, you can identify potential risks early, reducing loan defaults and overall portfolio risk.
Next, evaluate your fraud prevention systems. With bank fraud rates growing by as much as 25% annually, robust cybersecurity and fraud detection technologies are indispensable in today’s digital lending environment.
Implement systems that can:
Finally, ensure your institution is compliance-ready. Financial institutions must navigate complex regulatory environments, including:
Regularly audit your compliance processes and update your systems to reflect the latest regulations. Compliance management software can help a lot in this process, offering automated insights into your organization’s compliance status.
Excellence in customer experience is essential for growing your business lending services. With a focus on customer-side perception, you can build trust and loyalty. Use this checklist to get started:
Platforms like FileInvite can transform your customer experience by simplifying document collection and communication. With FileInvite, customers can upload, manage, and track documents effortlessly through a secure client portal.
Automated reminders and notifications ensure borrowers never miss deadlines, while customizable templates for document requests create a seamless, professional experience that reflects your institution's branding.
FileInvite integration with popular platforms like Dropbox and Google Drive further streamlines data management and sharing. With SOC 2 Type II compliance, FileInvite ensures the highest level of security for sensitive financial documents, giving customers peace of mind.
By using tools like FileInvite and prioritizing focusing communication and streamlined processes, financial institutions can enhance customer satisfaction, build loyalty, and stand out in a competitive market.
Expanding your commercial lending services requires a strategic approach that prioritizes operational efficiency, risk management, team readiness, and customer experience. By adopting these best practices, your institution can capitalize on growing SMB opportunities, build trust, and stay competitive in an evolving market.
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