This post is the third in the four-part series: Address Origination Challenges with Salesforce for CDFIs. The series discusses Craftsman’s strategies to optimize the intake, application, underwriting and closing stages of loan origination using Salesforce. In this post, we will discuss how Craftsman Technology Group uses Salesforce to manage underwriting processes while addressing origination challenges for CDFIs. 

Underwriting Challenge #1: Capturing Accurate Data

CDFIs often deal with self-reported data, which in certain cases can be exaggerated or inaccurate. How can CDFIs capture accurate data to properly assess risk?

• Self-Reported + Underwriter Adjusted Data. Salesforce can be configured to capture both self-reported and underwriter adjusted data. Craftsman has helped configure Working Solutions’ Salesforce instance to preserve the borrower’s original application entries while ensuring that the data used for risk analysis is clean and accurate.
• Automated Data Gathering. Some CDFIs are exploring the use of financial data aggregators, such as Plaid or Yodlee, to enable the organization to pull bank statement information with the applicant’s permission. On the Road Lending has integrated Plaid with Salesforce to reduce its reliance on self-reported data. 

Underwriting Challenge #2: Determining Credit Worthiness

Applicants are essentially measured by two factors. The first is their ability to pay as indicated by income and cash flow measures. The second is their willingness to pay as indicated by credit history, references, reputation and conversations with the applicant. How can CDFIs efficiently evaluate these risks and accurately determine an applicant’s credit worthiness?

• Risk Scorecards. Craftsman built a risk scorecard for PIDC where applicant scores on various criteria are weighted and aggregated. Salesforce has the flexibility to build clear and accurate decision models based on CDFI-specific criteria, to automatically classify an applicant into the correct risk tier.
• Financial Ratios. Craftsman has been asked by clients to build critical financial calculations, in some cases with warnings for threshold amounts. When raw data for financial calculations are entered into Salesforce, the system can provide warning flags for outcomes close to or beyond minimum loan requirements. If the credit report is pulled within Salesforce, those calculations can incorporate credit report variables. With these formulas in place, underwriters can easily see where an applicant might have deficiencies.

Underwriting Challenge #3: Generating Credit Memos

Some applications, especially larger B2B loans, go to a credit committee as the final stage of the approval process. How can underwriters easily synthesize applicant data so that they don’t have to spend hours writing up the credit memo?

• Use of DocGen Solutions. Salesforce integrates with third party document generation solutions such as Nintex DocGen. By uploading a template and mapping the fields, users can generate any document, such as a credit memo, with data filled in from Salesforce fields. CTG is implementing this functionality for the Housing Partnership Fund, which helps finance affordable housing development, to save administrative time and effort.

Underwriting Challenge #4: Team Coordination + Communication 

During the underwriting stage, there can be a lot of back and forth between the loan officer and the underwriter as missing documents are tracked and information is clarified. How can CDFIs track where an application is in the pipeline and make sure it is clear who the responsible party is? 

• Salesforce Approval Process. The Salesforce approval process enables underwriters to reject incomplete applications, approve those that meet the criteria, or escalate applications to a Loan Committee. Combined with queue management, the approval process makes it clear what items are still needed to move the application forward, and who is responsible for each stage. 
• Email Notifications + Task Creation. In addition to or as an alternative for approval processes, automated and/or manual email notifications can be sent to inform staff members when they are responsible for responding to questions about the application. Salesforce Activities, such as tasks, can also be helpful in this regard. Users can configure their home page to view tasks which are upcoming, due, or overdue. 

Underwriting Challenge #5: Tracking Funding Sources

How does a CDFI determine which funding source is applicable to a specific loan application? In some cases the choice of funds is obvious, but in other cases multiple funds with varying compliance restrictions might fit the bill. 

• Related Funds. Salesforce can be structured so that underwriters can easily find the most appropriate fund for the loan. Craftsman has built a Salesforce structure that enables users to identify and prioritize the most restrictive funds that are relevant to a loan, so that underwriters can assign the appropriate fund accordingly. 

Summary + Conclusion

The underwriting process requires an interesting mix of careful analysis and expediency in processing applications. Salesforce provides tools to navigate that balance, such as applicant vs. underwriter-adjusted data, risk scorecards, financial calculations, approval tracking and document generation solutions. 

The next and final blog in this series will explore how Salesforce has been used to expedite the processes inherent in the Closing Stage. Contact us for more information on Salesforce for CDFIs.