COMMERCIAL LENDING PROGRAM IMPLEMENTATION
Prior to implementing your Commercial Loan Program, the staff of BAFS will perform an initial evaluation of the existing internal resources that may be required for successful rollout, and the origination of Commercial Loans. Subsequent to that review, implementation steps are performed to provide the credit union with a program that is regulatory compliant, and procedurally efficient. This may require BAFS to review and assist to compile or amend your Commercial Loan policy and procedures to meet the guidelines of the NCUA or other regulatory agencies.
We work with you to establish mutually beneficial service standards for delivery of our origination and credit management products. We will track and measure these standards on a daily basis to ensure they are being met. These standards allow for your business development officers to provide feedback to your business borrowers with confidence that a decicion can be made in a timely manner.
LOAN ORIGINATION ASSISTANCE
Relationship lending is the cornerstone of a successful Commercial Lending program, and that role should be fulfilled by the credit union. However, BAFS offers a wide range of loan programs and lending services to expand your portfolio and to meet your member needs. We provide all of our participating credit unions with the tools needed to grow their portfolio and manage risks. Our supportive staff will answer and assist with any structure, requirements, policy questions, or government program qualifications that a member or a credit union staff member has regarding any loan request. In addition, the staff will provide guidance and ongoing training for business development efforts.
Our BAFS team has the expertise and experience to underwrite various types of small business, commercial & industrial, SBA and USDA loans. BAFS will review each application and make a preliminary determination of the complexity and time involved during the underwriting process. BAFS will then communicate with the credit union for a better understanding of the business relationship so that application processing may begin.
An in-depth analysis of the financial information, collateral data, credit structure, along with policy and regulatory mandates will be performed after all of the borrower’s data is reviewed and input into our state-of-the-art software system. The credit analysis will be compiled and submitted in the form of a Credit Memorandum along with a Risk Rating determination, which will identify the critical elements necessary to reach a credit decision. Credit Memorandum format is provided within a consistent format that will meet policy and regulatory mandates. Communication with the Credit Union Loan Committee for explanation and understanding of a credit analysis is also required with more complex relationships.
LOAN CLOSING COORDINATION & DOCUMENTATION
Once a credit decision for approval has been granted for a business loan request, the loan closing process and loan documentation process may begin. BAFS staff will initially coordinate with the credit union to determine member and credit union closing timelines. BAFS will then coordinate third-party services (appraiser, environmental, Title Company, etc.) in order to maintain the timeline established by the credit union. Once all of the conditions have been met to properly close the loan request, BAFS will provide all of the appropriate legal documents that are necessary to close the request. Each credit union’s loan documents are configured to comply with their internal loan policy parameters and legal statute for the state of the credit union’s domicile.
BAFS has an extensive history of assisting both lender and business owner with packaging applications for various government guaranty loan programs to include SBA 7(a), SBA 504 and USDA Business and Industry (B&I). In addition to packaging, BAFS can carry out other lender functions in underwriting, loan document preparation, credit administration and liquidation for your government guaranteed loans. BAFS has an approved Lender Service Provider (LSP) status with the SBA and acts as the lenders Agent as defined in SBA SOP 50 10 5.
Along with credit services, we also provide COLSON 1502 Monthly reporting as well as Semi-Annual USDA reporting.
As a part of the credit approval process and prior to a final credit decision, our certified staff will perform appraisal reviews to ensure all regulatory compliance has been met in accordance with:
- FIRREA (Financial Institution Reform, Recovery, and Enforcement Act) as amended by Dodd-Frank Reform Act
- Interagency Appraisal and Evaluation Guidelines
- USPAP (Uniform Standards of Professional Appraisal Practice)
- NCUA Part 722, Letter 10-CU-23
- State Laws and Regulations
- Institution specific policy and procedures
The appraisal review purpose is to test reasonableness of the appraisal and ensure that appropriate methods, assumptions and data sources were utilized and well supported. Our qualified review personnel are independent of the transaction and are insulated from any influence by loan production staff as required by the Interagency Guidelines. The review performed will be commensurate with the type and amount of the transaction and inherent risk. Based upon this risk-focused approach, we offer three types of appraisal reviews:
- Commercial Real Estate
- Complex Commercial Real Estate
- Investor Owned Residential Real Estate (IORR) 1-4 Family
Staff will also assist in any resolution of inaccuracies or weaknesses in an appraisal identified during the review process. Deficiency resolution will be thoroughly documented to ensure that no inappropriate coercion or influence was performed.
LOAN BOARDING / SERVICING / ADMINISTRATION
BAFS is your complete back office solution to managing your business portfolio. Subsequent to loan closing all business loan data exhibited per the loan closing documents are “boarded” and interfaced into a “Core” business loan management system. Each loan boarded is then scheduled for multiple servicing elements; loan payments, line of credit draw, accounting reconciliation, payment notices, and ticklers for loan covenant compliance and data tracking. Renewal and maturity notices for all loans are input upon initial boarding and lead times for upcoming reviews are prompted 60-90 days in advance. Each credit union maintains secure access to the BAFS Core System in order to view all of the detail associated with each loan relationship.
The staff of BAFS works closely with credit union staff members to ensure that files are complete and ready for any examinations, both internal and external. One key tool is the imaging and access to those images of all loan underwriting, support and closing documents that are securely viewable and available through the BLAST Portal. Therefore, the assigned credit union representatives can access, view or print their data related to credit union loans directly at the credit union location. A filing system is available to use where all files are indexed to ensure quick access, viewing and discussion when being questioned by an auditor, examiner or internal personnel.
LOAN REVIEW, AUDIT & COMPLIANCE
Once a loan is closed, all loan covenants and requirements are documented within the BLAST Portal. Each credit union will have access to a complete and updated list of tickler items per loan relationship at all times. The BAFS staff will monitor these requirements associated with each loan and provide detailed “Loan Exception Reports” if those covenants and requirements are not met.
When all requirements are met to properly review the credit relationship, BAFS will conduct a detailed loan review addressing changes in financial condition, trends in operations, guarantor analysis, and other business credit criteria. This loan “Check Up” is one of the most critical components of a successful Commercial Loan Program. The actions taken by the credit union staff to ensure a low number of exceptions; will assist BAFS staff members in providing a complete and accurate assessment of the loan status, financial standing and credit worthiness of that loan at the time of the review.
In addition, we will support your organization with a comprehensive set of risk management tools. Our approach is to provide credit analysis and risk management based on providing the credit union an extensive report and timely in-depth reviews that your examiner, auditor or management teams will appreciate. BAFS serviced loans undergo multiple quality control review and audits to ensure compliance with your Commercial Loan Policy, NCUA, SBA and USDA requirements. We also assist credit union partners with any regulatory audits from the NCUA, SBA, USDA or internal auditors when needed.
Commercial Loan Participations are an integral part of managing a successful program. While Commercial Loan Participations should be viewed as an acceptable component of a Commercial Loan Program, the standards associated with underwriting, loan documentation, servicing, and loan review should not be compromised. Relationship lending will sometimes provide opportunities for your credit union go beyond the boundaries of your current size and/or risk parameters. Therefore, the relationship opportunity can be started or enhanced by utilizing a sound Participation Program.
BAFS currently maintains an internal participation network with applicable underwriting, servicing, and credit administration services that efficiently manages your Commercial Loan Participations, whether your credit union is the originating credit union, or the buying Participant. This allows our credit union partners to participate in additional opportunities for qualified and certified business loans.
At BAFS, we provide your organization with both lending capacity to grow loans and asset management services to maintain portfolio stability and profitability. You do not need to invest in costly infrastructure, because we manage everything for you.
- Periodic analysis of portfolio financial performance and risk rating
- Business Loan trends
- Custom Reports identifying multiple loan categories
- Loan covenant monitoring and notifications of exceptions
- Portfolio diversification
- Policy and Regulatory Compliance
- Portfolio Concentration Review
- Portfolio Yield and Return
- Stress Testing
- Aggregate Relationship
- 5300 Section 4
TRAINING & CONSULTING
Specialized training classes are accessible at a minimum quarterly and whenever there is a need or request by any credit union or BAFS staff member. All credit union staff members are encouraged to attend and participate at all presentations which provide updates on new or changed BAFS services, products or procedures. Credit union staff members may view sessions via Webinars where provided. Periodically outside speakers and presentations will be available. This is a great opportunity for networking from within and outside the CUSO organization.
Annually, strategic planning at each CUSO credit union can be held with commercial lending goals and current internal processes being the focus. Upon request by any partner or outside business lending organization, members of the BAFS staff may be available for consulting.