Commercial Loan Application to Underwriting Decision Cycle Time

Commercial Loan Application to Underwriting Decision Cycle Time

KPI Details

Commercial Loan Application to Underwriting Decision Cycle Time measures the number of calendar days required to determine initial underwriting decision on a commercial loan, from the time that the application for the loan was received. Measuring Commercial Loan Application to Underwriting Decision Cycle Time is important to not only understand the performance of internal loan operations but to also understand the service levels provided by financial institutions to customers and the resulting levels of customer satisfaction. Extended cycle times can occur for any number of reasons, including multiple touchpoints within the application and underwriting processes (typically due to missing or incorrect information or documentation), a lack of communication between teams or with customers concerning the status of the loan, unclear commercial loan requirements, poor underwriter performance, or inconsistent training/use of job aids during processing.

KPI Definition

The number of calendar days required to reach initial underwriting decisions on commercial loans, measured from the time the initial application is received from the potential borrower until when the adjudication decision has been made by the underwriting, or risk management, function.

KPI Best Practices

• Develop a triage process for underwriting loans by sending more complex applications to experienced underwriters
• Create checklists to track documentation that has been received from borrowers
• Regularly audit underwriting rules to improve cycle times without hurting risk profile

KPI Calculation Instructions Commercial Loan Application to Underwriting Decision Cycle Time?

Two numbers are used to calculate this KPI: (1) the number of calendar days required to reach an initial underwriting decision on a commercial loan (measured from the time the initial application is received from the potential borrower until when the adjudication decision has been made by the underwriting, or risk management, function), and (2) the total number of commercial loan applications received. Include business days as well as weekends in the numerator. The date at which the application is received is the date from which the customer submits the application to the financial institution, regardless of area.

KPI Formula :

(Sum of Calendar Days Required to Reach Initial Underwriting Decisions) / Total Number of Commercial Loan Applications Received