PNC to debut entirely digital small-business loans

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PNC Financial Services Group is poised to become the latest big bank to offer small-business customers an entirely digital borrowing experience.

Starting early next year, business owners who apply for a line of credit online will receive a decision in as little as five minutes, the Pittsburgh company said. Applicants who get approved will collect their funds within one to three business days.

“Our goal is to have a product and an experience that frankly helps small-business owners. They are busy running their businesses,” Lakhbir Lamba, head of retail lending at PNC, said in an interview.

The digital experience will be available to business owners seeking unsecured lines of credit of up to $100,000. It will rely on technology from OnDeck Capital, an online small-business lender that also works with banks to digitize their lending processes. Financial arrangements between the two companies were not disclosed.

PNC already enables small-business customers to apply online for a line of credit. But once the new platform launches, the process will be faster and will rely more on automation, according to the company.

Prospective borrowers will be able to log in from their phones, their computers or their tablets. “We often see people bounce between devices as they go through the process,” OnDeck CEO Noah Breslow said.

As Americans use their mobile phones to perform tasks as diverse as ordering dinner and tracking their sleep patterns, banks are scrambling to keep pace.

In small-business lending, digital offerings from tech firms such as PayPal, Amazon and Square have been followed by online options from the likes of Wells Fargo, JPMorgan Chase and U.S. Bancorp.

JPMorgan launched its QuickCapital platform, which was developed with OnDeck, two and a half years ago. The new partnership between OnDeck’s ODX subsidiary and PNC has a similar structure to that earlier agreement. Under both deals, the bank establishes the lending criteria and shoulders the risk that borrowers will fail to repay. Also in both instances, the loans carry the bank’s brand.

PNC hopes to use its digital lending platform to attract new customers — and not just from the 19 states, nearly all of them east of the Mississippi River, where the $380 billion-asset bank has branches.

“Some of these experiences over time will become table stakes in the industry,” Lamba said. “But we believe some of us have an early-mover advantage.”

Lamba noted that PNC has launched several other digital initiatives related to small-business lending. He acknowledged that it is easier to automate the process for relatively small, unsecured lines of credit than it is for larger, more complex loans. The latter category requires borrowers to submit more information to the bank.

“So that creates a level of complexity in the workflow that you have to automate,” Lamba said. “It won’t happen overnight. But we are thinking through all that.”

PNC has also been working on digitizing the process of applying for and approving various other loan types.

In March, PNC launched Total Auto, an online platform that allows consumers to shop for and arrange financing prior to the purchase of a vehicle. Total Auto relies on technology developed by TrueCar, a Santa Monica, Calif., company that operates a digital automotive marketplace.

PNC is currently developing a digital origination and closing process for home equity loans, CEO William Demchak said during a conference call with investors this month.

“Believe it or not, to close a home equity loan at PNC today, you’ve got to go into a branch,” Demchak said.

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