What happen to the lending industry before the recession? A lot of fraud and lenders did not conduct adequate due diligence policies. Banks and financial services firms offered credit easily. The technology utilized was very limited. Technology not widely utilized to detect if the bank accounts were real or fake. After the recession many aspects have changed in the financial industry. Today, technology will outsmart borrowers. The technology in the lending industry has changed a lot. This will help entrepreneurs make better financial decisions. Furthermore, investors who allocate capital in the form of loans can feel more comfortable.
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Today, in the world of alternative business loans lenders turned to a system named “Decision Logic”. Decision logic is used to prevent fraud from business borrowers. It is an advanced bank verification that allows lenders to instantly verify the financial information of a potential borrower, online and in real time. Previous methods caused many problems for both lenders and the borrowers. In summary, this resulted in defaults, inaccuracy and fraudulent bank statements.
Decision Logic is the creator of this technology. The company’s goal is to improve the verification of high-risk assets for both borrowers and lenders. This improves industry standards within the fintech industry. In addition, this improves asset performance for lenders and investors.
How does decision logic work?
This is how the system works:
The day before closing a business advance or business loan the lender sends the applicant a link configuration. The owner of the company opens it up, they input their bank username and password. Many fear this part, but it’s safe. Decision Logic is a company that helps prevent fraud. The link can only be used once. If the business owner does not input the information within a certain time frame or inputs the wrong username or password, the link is no longer valid.
When the business owner inputs the username and password no one has access to that information. Business borrowers are giving permission for said lender that is providing the loan to view business bank account via the Internet. Underwriters can check in real time date and month to date bank activity up to that date when link is executed. Neither Decision Logic, or lender will have access to business borrower’s username or password. Once this information is submitted, company business owner allows the lender to view bank statements in real time data up to the minute to ensure that the financial information provided is correct.
This technology prevents fraud. At the same time it is used for several reasons. A business can apply for one, two or even three loans. With this system, when lender sees the bank account in real time, it ensures investors that applying merchant did not take a second or third loan. This prevents businesses from being over leveraged and reduces defaults.
This prevents businesses do not take on more debt than they can afford. South Florida was among the states with the highest fraud. Reducing default rates will help alternative business lenders become more competitive in offering lower rates and extended terms in the future.
ARTICLE IS TRANSLATED FROM THE MIAMI HERALD’S SPANISH EDITION. FULL CREDIT TO THE MIAMI HERALD.
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