Business loan

Business loan approval times are slashed

Decisions that would normally take a day or two before COVID took weeks or even longer, said David Gandolfo, a funding broker and CAFBA’s advocacy chair.

“It took a lot longer but it’s starting to get better,” Gandolfo said.

“They (the lenders) are like us, they work from home, files are emailed and retrieved remotely and questions and queries are not resolved in a minute like they otherwise would be.”

Banjo is a small business lending specialist that started operations in November 2015 and offers businesses unsecured loans of up to $500,000. Banjo CEO Guy Callaghan said the company strives to give customers answers within a day, even if they are not approved.

“When you think about the opportunity cost of waiting to get that money to fund growth, stability or profits…it’s an eternity,” Callaghan said.

“They don’t want to let themselves be made to make a decision, even if that decision is, ‘No, we don’t want to loan you out’, they don’t want to wait five weeks to be told that.”

With the backlog of mortgage approvals compounded by a rush of applications amid a runaway housing market, the dynamics affecting the business lending market are different.

The pipeline of business and equipment loan approvals has been bogged down by the shift to working from home, the closure of offshore processing facilities and a renewed focus on regulatory requirements, including fight bonds against money laundering,” Gandolfo said.

“It just blew things up,” he said.

“What would normally happen within a day or two would take a few weeks or maybe even longer.”

The growing backlogs became noticeable in mid-2020, peaking shortly after banks withdrew a number of simplified lending products, treating all customers as if they had just come off the streets.

“There were no simplified approvals up to $150,000, even if they knew you. Everyone is assessed as if they are new to the bank,” Gandolfo said.

Judo Bank co-founder and co-CEO Joseph Healy says delays in credit approvals for business loans are a big problem that hasn’t improved.

“There’s a big disconnect between sales and marketing and the reality of the customer,” Mr. Healy said.

“One of the reasons judo exists is because it took so long for borrowers to get answers from banks. I can think of many examples where it took six weeks to two months just to get a decision.