Work with small businesses, not against them

No bank wants to make the wrong decision when it comes to choosing a creditworthy borrower, which is where comprehensive lender software provides value. Smaller businesses might not have the same record as larger firms, but some experts believe that the right software is only part of the puzzle.

George Noga, senior vice president of revenue enhancement at Fiserv, spoke with American Banker about how financial institutions could greatly benefit from working with smaller businesses. According to Noga, not all small companies are overly sensitive to prices. Many of these organizations want a good relationship with their bank. 

"One reason why small businesses feel it's difficult to get a loan is the regulatory pressure banks feel makes it hard to make a loan," Noga said. "Banks have to be very careful. The gap that needs to get filled right now is short-term loans—the business that needs a couple thousand bucks for 30 days. It's not worthwhile for bank to go through the underwriting process frequently."

Noga explained that a lending methodology that looks at a business owner's deposit history, alongside other data accessed quickly from other sources, will benefit both parties. 

Lisa Stevens, head of small business banking at Wells Fargo & Co. told the Associated Press that it's important for financial institutions to create a plan and help business owners set up and  establish goals and then move forward.

Many of these company leaders are simply in need of guidance, Stevens said, and when banks can be flexible and work with them, it can generate long-term customers.

With the right customer management software, financial organizations can stay on top of all clients and their individual needs. Risk management will also be simplified, giving banks the assurance that they are making the right investments and working with reliable borrowers.

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