Using borrowing base certificates (BBCs) to increase your loan margins.

Most lenders shy away from Borrowing Base Certificates (BBCs) because of the sheer amount of time and paperwork they require. The BBC is a form prepared by the borrower and submitted to the lender periodically (usually monthly). It reflects the current status of the lender’s collateral, and should be compared to the balance sheet for consistency. Because these certificates require the banker to not only collect this information on an ongoing basis, but also review it and make a loan decisions – it is often seen as more work than it’s worth. However, when done correctly using the appropriate technology, BBCs can be completed promptly and can drastically increase your loan margins.

Bankers using BBC software to monitor clients

Bankers using BBC software to monitor clients

With the proper technology that cuts down on maintenance and cost requirements, banks can lend to small businesses they’ve historically avoided and they can do so more effectively and efficiently.  A software called BBC Easy was developed with this in mind – it automates a process that usually takes up to 4-8 hours into under a minute. By streamlining this process from beginning to end, bankers spend less time worrying and more time focusing on growing their clients’ business.

Welcome to lending in 2015! No more 10-key, printing, scanning or faxing. From the BBC Easy dashboard, bankers set lending parameters for each of their business clients. Businesses simply log in, and BBC Easy calculates and prepares the certificate based upon the lending parameters and data in the accounting system. Finally, the lender reviews the BBC from their dashboard and the process is complete.

Control access with advanced user-management

Various levels of access can be configured based upon roles and responsibilities befitting their position. This flexibility allows bankers to provide access to analysts or partners to review previously private portfolios. Likewise, businesses can enable third-party access rights for outsourced accountants or CFOs. Access can be granted in read, write, or admin levels depending upon the needs of the users.

Dynamic dashboards for lenders and borrowers

The business health overview pages provides a summary of the recent BBCs, along with trending charts for Accounts Receivable and BBC health. Lenders use their dashboard to prioritize daily work activities. Items that need to be addressed float to the top such as overdue BBCs and borrowers who have not yet activated their account. Enjoy more information at your fingertips with a summary of each borrower's line penetration and BBC status. Lenders can even maintain relationships by sending messages to borrowers right from the dashboard.

Detailed per-customer calculations

Not only does BBC Easy calculate a total valuation for the borrower, it also crunches the numbers for each individual customer reported by the accounting package. These calculations are reviewable each time a BBC is run to evaluate exclusions and totals. See at-a-glance details such as which customers have over-due invoices and which vendors contribute to Contra exclusions. Finally, compare their A/R advance rate used to calculate a net eligible A/R valuation.

Deploying the right technology saves both banks and businesses valuable time, allowing both to operate more efficiently. Banks can provide more loans, with less overhead and less risk as the information they’re receiving is timelier and lacks human error. If banks don’t embrace technology and find better, more cost effective ways to lend to small businesses, lending won’t change and banks will continue stall in this market. Start automating the BBC process and increase your loan margins today!