The Lasting Impact of the Pandemic on Commercial Lending Operations


The COVID-19 pandemic turned the financial industry upside down in 2020, creating many unprecedented issues for financial institutions, including disrupting the traditional workplace, impacting staffing and operations, and pushing institutions to work through an influx of PPP loan requests. With the U.S.’s vaccine rollout in full force, the global health crisis will likely begin to subside. However, the industry will still need to manage pandemic-related financial assistance for many commercial and small business customers for some time into the future.

Accelerating the Fintech Arms Race

From a technology standpoint, 2020 created a sense of urgency in its adoption, and in many cases, accelerated the budget allocation to do so. Some CTOs had years of IT projects expedited to accommodate the financial demands and relief programs resulting from the COVID-19 global crisis.

In the minds of commercial and small business customers, there has always been tension between what is acceptable from a tech standpoint, and what is not. When PPP loans became available to business owners needing immediate access to funds, it quickly became evident which FIs had invested in technology and could support the program and those that had not. For those banks and credit unions without the processes to manage an onslaught of PPP requests, many of their commercial and business customers simply moved their relationships to new FIs ready to take on the loans.

In many ways, new technologies have served as an equalizer, enabling smaller FIs to compete with much larger institutions. Whereas larger banks are thought to have more market power, financial leverage and more substantial balance sheets, some are moving too slow in the adoption of modern technology and losing customer relationships as a result. With the future of pandemic-related relief remaining largely uncertain, commercial and small business customers will be looking to bank with FIs implementing the right technology and services to cater to the “new normal.”

Streamlining Operations in a Post-Pandemic Environment

Small business lending is much more complex than consumer lending, requiring extensive amounts of documentation and data to successfully complete a loan. Commercial and SMB borrowers must provide lenders with updated financial statements throughout the life of the loan – traditionally a cumbersome task for both lenders and borrowers as many institutions are still manually collecting documents, direct emailing, making phone calls and relying on spreadsheets to track financial statements.

These antiquated processes further erode the relationship with customers and increase borrowers’ risk of loss in the event of default. Additionally, the manual collection and collaboration of documentation drives up servicing costs as lenders are forced to direct more time toward gathering information, rather than truly assessing the data to make better, more informed lending decisions.

In a market environment where accessing funds quickly is paramount, FIs need to be able to support a faster, more efficient process for their commercial and business banking customers and members. At a base level, banks and credit unions should be leveraging an automated system that notifies them once a loan closes, followed by requesting updated financial statements. By using systems to automate lenders’ workloads, FIs can turn the collection of documents into a strategic opportunity, rather than a time-consuming and costly process, and get the most out of their customer and member interactions.

Through secure document portals, FIs can build out the foundation of a commercial loan and identify the borrowing entity’s main contact to automatically request updated information on a recurring basis. This not only ensures that the institution reaches out to the correct contact, but also documents each request that is made. In the case of a default, the system records the multiple requests and automatically provides the borrower with an alert, saving the FI time and preventing negative customer interactions. Once documents are uploaded, the system saves this information, eliminating the need to re-upload, rename or move the files to another location, allowing for more efficient collaboration.

Lessons Learned

After experiencing the convenience and safety of remote digital relationships, the industry should expect this trend to outlive COVID-19. To win in the post-pandemic world, FIs must equip their commercial and small business customers with the tools to collaborate remotely and execute faster – providing clients with the ability to access products and services on their own time and from the location of their choosing.  

Now is the time for banks and credit unions to assess whether their existing technology infrastructure can support personnel and operations in the event of another economic disruption or downturn. The pandemic shined a spotlight on government-guaranteed SBA lending, including PPP and the Economic Injury Disaster Loan (EIDL) programs, and based on their level of adoption among business owners, institutions should likely presume that government-sponsored loan programs will continue to become more common. If a financial institution still lacks a way to activate these programs for customers, then that is an indication that there is more work to be done.

Rather than waiting for a crisis to force an internal analysis, or chasing the glitziest new trend, institutions would do well to ask their client-facing personnel what the top friction points are in the existing processes and truly identify what is broken. It can be difficult to gauge where technology stands in such a rapidly evolving marketplace, but this also makes it easier to access and adopt new products and services to benefit the institution, its customers and its members. For commercial lending, by streamlining the collection of documents, paired with the availability of customer data, FIs can make more frequent, real-time offers that allow commercial loan assets on the FIs’ books to become more liquid, transparent and efficient over time.

 David Brooks is founder and CEO of Cirrus, a fintech provider of cloud-based document management software. For more information, visit   

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