Roy Malone has a thing for speed. The president of Golden Pacific Bancorp — and a long-time international adventure racer — has long been frustrated by the sometimes plodding pace of loan decisions for small-business borrowers. So under Malone's direction, the Sacramento, Calif., company last year introduced an online lending platform that vastly speeds up the approval process for borrowers seeking Small Business Administration loans ranging from $5,000 to $150,000.
"I'm drawn to efficiencies," says Malone with a laugh.
The automated lending process is designed to make it possible for Golden Pacific to make the types of small loans banks generally shy away from because they take as long to process as larger loans but don't generate nearly the returns. Eventually, Golden Pacific intends to license the technology to other banks.
"It's a very inefficient asset for the bank," Malone says of these $5,000 or $10,000 loans. "It costs more than it yields."
With better technology, that math problem is changing.
Successful upstarts like OnDeck and Kabbage have come to market with faster online lending options. Banks like Golden Pacific are finding ways to more efficiently collect data online to determine creditworthiness. The modern lending experience is meant to help busy small business owners obtain capital so they can, say, buy a new piece of equipment with a few taps of a device.
"Small businesses don't have hours in the day to go through the old way of going through the loan [application]," Malone says.
Golden Pacific's online lending platform, powered by Better Finance (formerly known as Bill Float), can help the community bank extend lines of credit to small-business owners in less than a week, as opposed to weeks or even months. The application process can be finished within the length of a 30-minute television show.
Malone's goal is to use the platform, called SmartBiz, as a way to get more capital to underserved small firms that could become tomorrow's large corporations. "We have an opportunity to improve their business and hopefully make a mark on the business economy," he says. "That's what motivates us."
The need for banks to improve the lending process will become ever more important as young generations grow up. Malone, a father to two teenagers, can't conceive of a future where his children would ever come into a branch to fill out paperwork for a loan. "The new paradigm will be getting things done electronically," Malone says.
That transition, however, will likely require forward-thinking bankers like Malone to work with nonbank upstarts, like Better Finance.
"We get a little bit myopic in the banking industry and do the same thing the same way for so long — it's hard to think outside the proverbial box," he says. "It's neat to have a tech partner join the conversation. …We are bankers. We aren't engineers and coders."
Up next, the community bank is brainstorming ways in which to bring the SmartBiz model to other credit products, like consumer loans. "I would love to strive for an institution that affords its customers quick, efficient, real-time decision making, and I think we can do that with technology," says Malone.