In this episode of Lending Made Easy, hosts Bryan Peckinpaugh and Mitch Woods are joined by Scott Gillanders from Berkshire Bank. Together they explore the evolving landscape of small business lending. This episode delves into how technology can streamline the lending process, making it more efficient while retaining a personalized touch.
Small business lending involves providing loans to small businesses for various purposes such as startup costs, expansion, equipment purchases, and working capital. These loans are crucial for the growth and sustainability of small enterprises.
Technology improves the small business lending process by automating application procedures, speeding up loan approvals, and enhancing data analysis. This results in a more efficient, accurate, and user-friendly experience for both lenders and borrowers.
Digital lending platforms offer numerous benefits including quicker loan processing times, streamlined applications, reduced paperwork, better access to financial data, and improved customer service, all of which contribute to a more efficient lending experience.
Yes, technology can significantly reduce the time it takes for small businesses to get loans. Automated systems and advanced algorithms expedite the review and approval processes, allowing businesses to access funds more quickly.
Banks maintain a personal touch by incorporating personalized communication strategies, offering customized financial advice, and ensuring that customers can easily reach human representatives for assistance, even when using digital tools for lending.
Mitch: Well, welcome to another episode of Lending Made Easy. And today we've got a special guest with us. Bryan and I are joined by Scott Gillanders from Berkshire Bank, and we're going to be talking all about small business lending. So Scott, thanks for joining us today and welcome to the show.
Scott: Thank you, Mitch. Thanks, Bryan. I'm happy to be here.
Mitch: So Scott, could you tell us a little bit about yourself and your role there at Berkshire Bank?
Scott: Currently, I am the credit director for our government guaranteed lending line of business, which is all of our SBA loans in lay terms. And we are a nationwide SBA lender in our department. So we handle all of the requests that come from our 96 financial centers within the bank and we have direct sales teams nationwide.
And so I'm in charge of all the operational aspects of that.
Mitch: That's a big undertaking then with that many banking centers.
Scott: Yeah, we do about 200 million a year in loan volume. We're pretty much off, always in the top 20 as the SBA rankings on volume.
Mitch: That's awesome. So I want to talk a little bit about Berkshire's philosophy when it comes to small business lending. What are some of your core philosophies as a bank around servicing small business customers and lending?
Scott: Berkshire's been around quite a while, since 1846. And it was founded on principles of community. We're a purpose driven, community focused bank. And what that means is we try to provide as much personal service as we can and find financial solutions that, you know, meet the needs of our clients.
So we like to say, we'll meet you whenever, wherever with a team of my bankers, which is our term for folks that travel to you, to your place of business or wherever you need banking services. So on a small business perspective, we're coming out boots on the ground to meet you.
Mitch: I guess kind of a follow on question there. How does that really set you all apart in your market when it comes to servicing? Do you feel like that's a major competitive advantage compared to other peers there in your, in the markets that you serve or do you feel like that's something where like other peers are kind of catching up too.
Like, is that a big differentiator for you all there at Berkshire Bank?
Scott: Well, I've worked for very large banks and I've worked for very tiny banks and I've worked for non banks. And so I've been a little bit everything in between, but I think Berkshire, you know, fits a sweet spot in that we are large enough to have all of the tools in our quiver with the full suite of financial services.
So, you know, we've got a term DigiTouch, you know, to talk about having access to the best technology that's out there, but we try to provide it with a personal service. We think where you bank matters. So part of that is delivering it to the community.
Mitch: That's awesome. I like that, DigiTouch. I'm going to start using that. So I guess you're like shifting thoughts here a little bit. So what are some of the biggest challenges that you all have faced there when it comes to small business lending and how have you been able to address those there at the bank?
Scott: I guess we can talk about DigiTouch again because, you know, one of the things that is very important in this modern world, and say that firmly as a Gen Xer, is that bead and service are really the differentiators when you're, you know, working in a product that's based on really an intangible product. I mean, currency has tangible value, but we deal in how can we make your money work harder for you?
How can we provide financing for your small business to leverage assets and grow opportunities for you and your family and, and the community at large? So, you know, it really takes a lot of effort to start focusing on making those products and services faster to market. Technology is requiring that we pay more attention to not just who is accessing those, but how you can apply for a loan at two in the morning, many places, but the downside of that, we see is that sometimes that comes with not enough financial education on how you can access those products.
If you're just, I need a loan, what if it's a use or a straight or terms that right now, and then there's the right product. So we like to think that we're trying to balance all of that and deliver what's best for the client.
Bryan: Yeah, that's a great point, Scott, that tends to get overlooked. You know, everybody's pushing so hard into pure digital, right? And wanting those online applications so that you can apply at two in the morning, but that puts a lot of assumption in the financial intelligence of the people on the other side of the application.
So you're, you're spot on. You've got to blend that and, you know, start from that focus of what's right for the borrowers, making sure you're getting them in the right products, not necessarily just capturing those 2 a. m. Oh man, I really need a loan requests.
Scott: And Bryan, we can talk more a little bit later about applying for a loan at two in the morning, because we do have that too.
Bryan: I don't doubt it. There's a lot of people that wake up stark out of, out of a dead sleep and the reality crashes and , they know they got to do something. So. Got to have that blend.
Mitch: Definitely. And, you know, I think Scott, you're talking a lot about this again. I'm going back to this idea of the DigiTouch and blending all of these things, and even back to Berkshire's philosophy of an approach to small business lending. But, one question that I'd like to kind of unpack a little bit more also is, how's technology really changed the way and your philosophy around small business lending over the last several years, right?
Knowing that online applications are kind of table stakes in a lot of pieces of that puzzle, but even identifying, like, how do you approach this from a bank perspective with internal training? How's technology impacted internal operations and those externally kind of go to market lending operations as well?
Scott: One of the great things about technology is the ability to access more people in more places and really reach beyond maybe what you think is your core area or lending and really get into communities and find those that may not traditionally have access to capital. And that's the great thing about, something like DigiTouch is that you're trying to both be efficient and deliver things where people want them, when they want them, but also not leave anyone behind.
You know, one of the greatest things about small business lending is you're lending to Main Street, not Wall Street. And so it's very important to know who your customer is and work with them. We partner with outside agencies and development centers to provide a bevy of ways that a small business owner can get additional assistance beyond just a product or service from the bank.
One of the things that I like most about what we do is that we see tangible results. A storefront goes from papered over to open and a yogurt shop or pizza place or new CPA practice, whatever it might be, and that's very rewarding.
Mitch: Yeah, that's, that's why we do what we do, right? Like it's seeing the benefit of all the work that you've put in and really seeing people's dreams come true, right? You see that in a lot of other ways in life, right? Like I'm excited for the U S Olympic time trials for swimming team are happening in Indy this week here and getting to go see that and see someone's dreams come true and on like a huge stage is great.
But I think what we do as bankers, especially in small business lending, you get to see someone's real dream that they've worked really hard on come true as well. And it's, it maybe it doesn't have that same stage, but it's still awesome to be able to see someone be successful at something that they've put a lot of effort into and to be a piece of that too. So that's the heart of what a community bank is all about. So I really appreciate that insight there.
Scott: Yeah, Mitch, that's why we say where you bank matters because we try to really believe that in that we're not just here to be transaction oriented, but a relationship that will stand the test of time
Mitch: I have to kind of ask this question, right? Since this is Baker Hill's podcast, you know, given all of that, right? Seeing the success of your customers, implementing technology that's helping you meet them where they're at, what role has Baker Hill helped you creating that and developing that type of culture and those processes, that technology to provide that level of service to your clients?
Scott: one way. And Bryan, you'll know, and I'm going to use slightly dirty phrase of PPP loans, you know, some people.
Bryan: all like to try to forget that Scott, but it's okay
Scott: Let's be clear on what we mean. The process of pushing billions of dollars out into the nation in a time of crisis was a lot of work by many hands. And so Berkshire Bank in round one funded over 5, 000 PPP loans and 750 million.
So, then the government said, okay, well, now you have to apply for forgiveness and something that could have been extremely manual with emails and people walking into branches and submitting documents. Baker Hill was there to provide us with a technology solution. Through a client portal, which is embedded in the next gen suite with the product, but specific to PPP, it was able to handle 5000 transactions in a very compressed period of time where borrowers were able to borrowers forgiven grant loan program, whatever you want to call it, but they were able to upload into the client portal, the documents, and they were mapped and then there was an interface built to submit them directly to the government. I mean, that was a huge lift of human capital that was compressed and managed by a technology solution.
Without that, we couldn't have done the numbers that we did. And frankly, it was a fantastic introduction to how the product works on a normal day.
Mitch: Anything but normal there, right?
Scott: Yeah. But as we get further away from that event, it's with fondness to think, wow, that really worked well. And it wasn't anything overtly complicated. And I think that's another thing about technology that is important is that this goes from an Apple watch to an iPhone or whatever you're talking about is that. It needs to meet the needs of the user and there's some extremely smart people in the world and then they have to tell us how to use it. So telling stories and being a good storyteller about how to affect favorable use of technology is something I think we can all focus on and we have to be mindful of.
And so that's one way that I will give a shout out to Baker Hill is I feel like they make sure their clients understand. And the product and how it works. And don't just leave you in a lurch to say, well, you figure it out or sure. 10 cents a dance, uh, to figure that out.
Bryan: We appreciate that, Scott.
Mitch: Talking a lot about technology here, but also just small business lending in general. Like, where do you see small business lending heading in the near future? And part B to that question, what role do you think technology is going to play in that? So kind of two parts here. Like, what do you see is kind of on the horizon for small business lending? And then what do you see the role of technology playing in that?
Scott: I think it's going to be a combination of automation. And personal service is that we have to look beyond just, I mean, scoring models are great, but in SBA lending, you might be missing opportunities if you're not paying attention to the totality of circumstances. And I think that's one thing where technology can be a great tool, but it needs to be monitored and AI could be a whole different discussion and separate podcast, I suppose, but someone still has to mind the store.
Mitch: Not enough time today.
Scott: Yeah, not enough time. Someone still has to mine the store for that, right?
Bryan: That's right. You got to know what you're doing with those kinds of tools.
Mitch: And I like what you said there, too. Even with automation, you can miss those opportunities. And I think it's really important. Something that we've talked about in the past is today's small business customer could be tomorrow's commercial customer, right? So building that experience is really important.
And having that human touch along the way is setting those expectations for what's to come in the future too, so I think that's awesome. So we're getting close to the end here. So I want to give you one last question. What advice would you give other banks that are looking to enhance their small business lending processes? So someone out there is looking for ways just to make small business lending easier for their customers, easier for their bankers. What advice would you give them?
Scott: I think it's important to not just look at technology as a solution, but you have to look inward at your processes to make sure that you're evaluating how you want to do business and then leverage the technology to suit that.
Mitch: Scott, thanks so much for your insights. I think a lot of things that anyone listening in today would, will be able to take away and thanks everyone out there for listening to today's episode of Lending Made Easy.