Processing deals from commercial brokers

This week we explore the industry of commercial loan brokers, and the bottlenecks that arise around lenders needing to quickly assess deals.

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Intro

Without brokers, you have two parties that can’t reach each other:

A business that needs a loan but doesn’t know where to start.
A lender that can’t reach all businesses.

Lenders often rely on brokers to source deals, and businesses rely on brokers to get them competitive offers.

The broker acts as an intermediary, gathering offers from many lenders.

This is valuable as it presents the best view of the business, and finds as many relevant lenders as possible.

It simplifies the life of the business owner, in much the same way a mortgage broker simplifies the life of a house buyer, by acting as a point of contact for both parties.

In return, the broker takes a commission fee.

How deal processing works

Brokers need to move fast. Their conversion rate drops off dramatically after only a few hours from first contact.

The broker will need bank statements, financials and often a business plan, and with this they will ideally find an indicative offer in a matter of hours.

Imagine a broker receiving multiple 50-page financial statements. They might spend hours just extracting key figures for each lender’s form.

Below is a simplified overview of their process:

flow

The problem: The pink blocks indicate where data is manually extracted from documents.

The same data is extracted, mostly manually, at least 4 times!

If there is any delay on the broker or lender side, the borrower is very likely to have moved on.

This doesn’t even touch on the back and forth follow-ups on missing documents, incomplete financials and any gaps in the business plan.

The borrower has also contacted a few brokers, so this process is repeated in parallel!

flow

For a good deal, things can move fast. In the end, for both the broker and the lender, speed and accuracy are essential to win deals.

How to improve this

There are a few ways to improve on this process:

Building loan marketplaces.
Building integrated systems.

Both of these require significant coordination among all three parties.

The simplest and most effective way to improve this (in my opinion) is to keep the structure much the same, but replace the pink blocks with fully automated data processing.

Currently, the data is being extracted manually at least 16 times in the above scenario, let alone accounting for revisions and updates!

Sea.dev fixes all of this!

Improvements on the broker side

Here is how we improve the process for the broker side.

Broker asks the Lender for preferred investment memo template.
Broker extracts the data with the investment memo template as a target.
Broker refines, exports and sends the investment memo to Lender for easy approval.
[Optional] Lender is given access to a Sea.dev data room directly, and can directly access the files, extracted data and reports to validate.

Improvements on the lender side

Here is how we improve the process for the lender (if they get a deal from a broker who doesn’t use Sea.dev):

Lender receives deal, uses their preferred fully customisable Sea.dev Investment Memo template.
Lender extracts the data with the template as a target.
Lender analyses the investment memo and makes a decision!

In both cases, the process is accelerated, decisions can be quickly made, and if there is a valuable deal to be made, the broker and lender stand a better chance of making it!

app

A few key features

Lenders can:

Track fields from source document through to investment memo.
Ask questions of the data and of the source files, in plain English.
Create new extractions, analysis, and explorations using the Sea.dev workflow primitives.

All powered by the latest in AI technology, optimised for Business Lending:

Foreign languages, foreign alphabets, handwriting, charts and diagrams with ease.
Automatically flag missing information, and draft follow-up emails.
Export data to Excel, and sync directly into CRM or LOS systems.
Enterprise ready data security and compliance.

Why this matters

Lenders and brokers are part of a system that meets the needs of business owners. Making this process more efficient enables more deals to be done, with more transparency, accuracy, and resilience. This leads to better funding options for businesses.

Our goal: enabling lenders to do deals with speed, accuracy, and conviction.

Next steps

Get in touch if you are working with data from brokers and ready to take the manual work out of preparing and reviewing deal files