The Commercial Lending Process Should be Consistent From Day One
These days I spend my time writing software to support District in our quest to reengineer the commercial lending process. In a past life, however, I was a residential real estate developer. During my time as a developer, my number one headache was the lending process. In fact, I stopped loving my job because of it. The stress and overhead of seeking financing took away from what I really loved -- building buildings. This is one of the reasons why I came on board as a software developer at District: I wanted to be part of the solution.
One of my deepest frustrations when attempting to borrow funds for a project was the inconsistency across banks, as each seemed to have a different process. Every bank needed different documents at different times and it was always a bit of a black box as to when a loan would be approved or not. I yearned for a lending process that was as easy as applying for a credit card or an auto loan. When applying for one of these, there is often no uncertainty as to the status of your application, nor confusion as to what is needed from you, and when. The commercial real estate lending world needs simplicity, transparency, and predictability - but above all, consistency. District’s goal is to improve the lending process supporting these tenets through the use of technology.
How Can Technology Make Commercial Lending Consistent?
A modern lending platform needs to optimize borrower's time, as real estate developers are better served by being in the field overseeing their projects or seeking out their next deal. In the commercial lending space, a major time-saver, but also a major concern is the electronic transmission, protection, and security of Borrower information - especially in the context of applying for a loan. Filling out the same loan application each and every time a borrower has a new deal is redundant and time-consuming. Of course, some information needs to be updated, but a lender should use technology to do as much of the work for a borrower as possible. How wonderful would it be that, once you have an accepted sales agreement, you press one button and start the lending process? No more spending a day in the office collecting documentation and filling out applications. All your relevant information is prepopulated from past loans or connected data sources. Simplicity.
So much information is accessible these days via computer APIs. I can not even begin to count how many times I have entered information that could easily be automatically imported from my credit report, a banking API, or some real estate database. Why does the lending industry consume so much of their client’s time? It is counterproductive both for the lender and the client.
Smart lenders grow their businesses investing in volume as much as in the quality of loans. Thus, having their clients doing what they are best at - finding, managing, and closing deals - is in everyone’s best interest. The flipside, which is the current standard, is a developer who spends a great deal of his time guessing or estimating where his lending process stands.
Has my file been reviewed?
When will it be reviewed?
Is there anything needed from me?
Has the appraisal come in yet?
Are we on target for our closing date?
Are we approved for funding?
These questions - and more - constantly are top of mind for most borrowers as they navigate the loan process. More often than not, a loan broker has to call someone, who has to call someone, who has to call another person just to answer these questions. Why does every borrower not have a realtime dashboard or email notifications to signal progress? The answer to every question should be a click away. That’s why at District we created the DREAMS Portal. Realtime status updates when a borrower needs them -- no phone chains required.
Below is a screenshot of our upcoming notifications panel within our DREAMS portal. Our customers can very quickly see the status of their loan applications and see if there are any action items required of them. Transparency.
Not All Lenders are Created Equal and Real Estate Developers Know This
It should be evident by now that District is able to provide a reliable and consistent lending experience for our customers. Knowing what to expect, how to interact, and being able to trust your lender to always keep you in the loop makes a world of difference when it comes to finding a loan. Circling back to my days as a real estate developer, very few lenders even thought this way. The ones that did always got my business. Regularity in the process was a serious competitive advantage because, as a developer, spending less time focusing on the lending process would open up time for other aspects of my business. Consistency.
To truly meet our goals of being consistent, innovation has to happen at all levels. One of District’s biggest competitive advantages is our ability to issue a commercial loan terms sheet very quickly - with the click of a tab. We have found on average it takes nearly a day of worker hours to issue a complete term sheet and a good portion of the work can be automated. By developing custom backend software to aid in the issuing of term sheets we drive efficiency to the lending process.
Besides following the same steps and paths to each and every loan, the conveniences of managing all your deals in one place 24 hours 7 days a week provided by DREAMS is priceless to productivity. Are you a real estate developer with many loans in the pipeline? We’ve got your back!
Below you can see how simple, clear, and straightforward it is to find your loan applications and to gauge where each stands.
As I mentioned above, other lending segments such as credit cards, auto loans, and small residential home loans have figured out the need for a simple process. In these areas, many clients are first-time borrowers as opposed to commercial real estate veterans. For the former, you need a simple straightforward worry-free process. Until now, it has been believed that veterans did not need that same care. District innovates by focusing on the customer experience and using technology as the means to achieve simplicity, transparency, and consistency.
District is a balance sheet lender re-engineering the commercial real estate mortgage process. By developing innovative technology, District is able to increase the speed and accuracy of deploying capital while increasing transparency into the lending process. As a national firm, we specialize in short- to mid-term bridge debt on all product types with competitive rates and leverage.
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