SPARK makes SBA and commercial loan origination more secure and efficient by digitizing the loan origination process. Everyday SPARK lenders successfully and digitally originate loans across the country. Nick Elders shares more success stories with TechBullion and the opportunities available on SPARK.
Please tell us a little more about yourself
Thank you! I’m Nick Elders, co-founder and Chief Executive Officer of Ignify Technologies Inc., based in Minneapolis. Ignify is responsible for the design, development, testing, delivery, selling, and support of SPARK, the cloud-based loan origination platform designed to simplify the process of delivering secure and efficient lending products to thousands of small business owners.
It’s really my upbringing that led me down this path to SPARK. Because finances were tight when I was young, I was always drawn to small businesses – companies that entrepreneurs founded that I believed were really the driving force within their communities. I still believe that these are the businesses that made the most impact on people’s lives. That passion led me to spend time after college turbo-charging my experience within the small business space so that eventually, I co-founded SPARK as a Public Benefit Corporation, the only PBC in the bank loan origination space. That designation means that through SPARK, I advocate for leveraging fintech innovation to improve economic opportunities for small businesses and I’m able to be a champion for financial inclusion, especially in underserved communities.
Before founding Ignify, I worked in technology strategy, process design, product management, fundraising, investor pitching, business development, team development, and sales for the national non-profit, Community Reinvestment Fund, USA (CRF). At CRF, I led teams who developed the SPARK platform from the first line of code to its use by more than 30 financial institutions.
On the more personal side, I‘m a graduate with an economics degree from Macalester College in St. Paul, Minn., and I enjoy [dis]assembling classic cars, mountain biking, urban farming, and spending time with my family.
What is SPARK?
SPARK is a transformational loan origination platform that makes small business lending easier. It’s a cloud-based platform that securely digitizes lending, from lead capture to closing and all points between, and is now used by dozens of banks, Loan Service Providers, and CDFIs across the country.
SPARK eliminates time-consuming manual processes that bog down traditional SBA and commercial loan origination. SPARK is more secure, and efficient for banks and their customers as it digitizes the entire origination process.
As a loan origination platform, what unique features and services do you provide at SPARK. Could you give us a walkthrough of the platform?
SPARK’s mission is to digitize lending processes, automate data and information collection, and help traditional lenders turn the FinTech ecosystem in their favor. SPARK makes commercial and SBA loan origination easier, more secure, and ultra-efficient for banks and their customers by digitizing the entire origination process. Customers can operate a Hub and Spoke model resulting in our loan origination platform now serving as the back-end processing engine for over 500 bank customers.
By eliminating many manual processes and the need to share resources, SPARK users can shed the repetitive, time-consuming tasks that prevent them from scaling their loan origination operations. SPARK increases efficiency and security to open time and opportunity for its bank customers to focus more on their own customer relationships.
And with continuous software updates every eight weeks, SPARK enhances its automation and user experience frequently, to exceed industry standards and deliver on changing customer needs. SPARK is on the forefront of the latest loan origination technology, helping its customers surpass the competition, heighten ROI, and win back loyalty with modern processes that are as easy for internal teams as for the customer. More than that, we believe in banking and lending that does the most good for communities and business owners, combining our expertise with the service and heart our customers appreciate.
Before SPARK, what problems were SBA loan originations facing, how is SPARK the solution? Is digitizing the origination process best for the future?
First of all, there are many small business bankers in the field who are experts in SBA processes. It’s a specialized skill that should be honored. But for decades, lending by banks to small businesses remained virtually unchanged, relying on the same manual, paperwork-heavy processes as the world around them innovated. And while digital transformation has started to appear in lending over the years, it wasn’t deemed mandatory — until COVID-19 changed everything.
As a result of the pandemic, financial uncertainty and widespread unemployment inspired changes in retirement balances and consumer spending habits. The Federal Reserve slashed interest rates, resulting in a spike in home and auto refinance applications from owners looking to save money. And to make things more complicated, Paycheck Protection Program (PPP) mandates for small business loans changed almost daily. If they hadn’t already, banks needed a way to make communication with loan recipients more flexible and personalized — at a time when bank customers (small businesses and families) needed them most.
Without the pressure of the pandemic, digital transformation in the lending industry would have taken years more to implement. But crisis has a way of accelerating innovation and transforming technology for good. SPARK believes that it’s time for a new era of banking and lending technology — one that meets the changing needs of consumers with helpful, digital experiences. While banks that have transformed are thriving, there’s still much at stake for financial services providers who haven’t. Some insights to prove that fact:
- Late-blooming financial institutions are playing catch-up just to retain market share. In fact, 53% of financial executives report feeling at least somewhat behind (if not very far behind) their peers in terms of digital transformation.
- Digital processes allow for more inclusive lending practices, building consumer insights and demographics into product innovations to serve both high credit consumers and low-income households, students, and freelancers. And inclusive lending matters more than ever to consumers, considering that nearly 45% of millennials (a generation of 75 million U.S. consumers) belong to communities of color.
Fortunately, there is a technology solution in SPARK that will allow small business bankers the ability to do more of what they are experts in – small business lending.
Businesses have always relied on banks. What is wrong with how banks currently fulfill SBA loans for small businesses and why is SPARK THE BEST?
Without SPARK’s loan origination platform, lenders miss out. Digital lending makes business sense. Digital processes are faster, more collaborative, and easier to use, resulting in higher employee productivity and more loans processed in less time. Plus, automation eliminates the risk of human error, which equates to time, money, and customers lost.
Currently, it’s estimated that 30 to 40% of lenders’ time is spent on manual tasks across siloed systems. But lenders who rely on these paper-intensive underwriting processes end up prolonging the loan origination process and likely lose customers (and money). Instead, digital lending platforms decrease the number of steps in the process, reducing origination time and shortening time to value.
In what ways can technology simplify the SBA and commercial loan origination and what other trends do you see (both positive and negative) in SBA loan origination?
While consumers still value authentic, human interaction, they value their time and money too. SPARK’s cloud-based lending platforms are the happy medium that makes the most sense for the digital age, prioritizing customer relationships instead of wasting precious time. SPARK is the all-in-one, cloud-based loan origination platform with solutions that benefit everyone. That’s why it strives to cut through complexities with a straightforward approach to lending technology for banks, LSPs, and mission-driven lenders. We simplify the loan origination process for everyone from sales to underwriting to disbursement through automation, user-centered design, and deep SBA and commercial lending expertise.
What’s more, there has never been a better time to engage with SBA loans. Consider these trends:
- According to the ABA Banking Journal, as the small business recovery took off in the second quarter, a substantially larger share of banks reported easing standards for business loans, continuing the easing trend seen in the first quarter of 2021, according to the senior loan officer opinion survey released by the Federal Reserve on August 2, 2021.
- The average personal loan balance in 2020 was $16,458, according to Experian. By contrast, the average loan amount approved by the Small Business Administration was $533,075 in fiscal year 2020, according to Federal Reserve data.
SPARK is the only Public Benefit Corporation in the bank loan origination space. What does this mean for the business?
Throughout the recession, I watched a new category of lending software businesses called “FinTech” heating up, and early entrepreneurs were lining up to capitalize on the opportunity that post-recovery small businesses offered. Instead of paperwork, documentation, and customer calls that banks had grown accustomed to, these lenders relied on predictive algorithms, scoring models, and enhancements to grow. Plus, without brick-and-mortar branches, they also operated on a less capital-intensive model.
But while they could make strides in streamlining the loan origination process, these businesses completely missed the point: to nurture the community by helping small businesses in need. Unlike banks, these lenders were unregulated. They’d borrow money from hedge funds and other VCs, promising a high return profile, only to turn around and lend that same money to small business owners at much higher rates. They were growing from business owners, not with business owners. Under these conditions, small businesses were forced to choose between the slow speed of banks or the high price of independent vendors. It prompted an endless cycle for lenders of extracting all available cash flow from a business, keeping investors happy, and enjoying the spoils. And when cheating hard-working borrowers is the major motivation of business, everyone loses. I knew…and still believe…there is a better way: FinTech for good.
As a Public Benefit Corporation, SPARK works to provide greater access to responsibly-priced capital that creates pathways to prosperity for small business owners. Through our network of for-profit and mission-based lenders, SPARK focuses on digitizing lending processes, automating data and information collection, and fundamentally transforming how small business ecosystems operate.
Sure, we had the opportunity to make a quick buck powering predatory FinTech lenders. But we said “no,” choosing instead to optimize community development financial institutions (CDFIs) because it was the right thing to do.
Is it harder to do the right thing? Yes. Is it more difficult to find a better way? Absolutely. But nothing worth doing is easy. And communities are worth it. When small businesses are enabled to grow, they hire (usually locally) — providing livable wages for their employees who are then able to purchase goods and services, invest in their communities, raise families, and lead happy lives.
What is next on your roadmap? Any available opportunities for investors and partners at SPARK?
At SPARK, we’re not here to meet industry standards — we exist to rise above them. We’re fearless in our pursuit of creating the most innovative loan origination technology, combining our expertise and savvy with the service and heart our customers appreciate most. Our team is right now working on a complete refactoring and redesign of the platform to update the interface incorporating more modern open-source technologies. Why? Because we know we can continually improve to speed up the process of loan analysis and origination in small business lending by building and supporting a better customer journey throughout the process.
Along a different line, SPARK recently took several of its core lending concepts and reassembled them in a unique and innovative way, which allowed the platform to begin supporting equipment and fleet leasing structures, whereas prior to the release, the platform was focused exclusively on loan origination. This enables SPARK to expand into an entirely new market segment and begin taking market share in a $100B+ revenue market.
Are we looking for investors? Well, it’s always our goal to grow and I’m not convinced that 100% of that growth should be organic.
Tell us more about your team at SPARK? What makes you special and what level of customer support services do you provide?
From former loan officers and bankers to technologists and software architects, our team holds decades of experience in loan origination — so our solution is always as tailored and effective as possible. We’ve built a team and a rhythm. We’ve relentlessly refined the platform to build a foundation that we can now expand and use as a springboard. And as our customer base has grown, so has our ability to incorporate their feedback, serve their needs, and build engagement. We know there’s much more to come for the FinTech industry. And we now have battle-tested, data-backed proof of our abilities and impact. But it’s our values and our people that will usher us into the next wave of the industry. People are still at the heart of tech innovation, and with our eyes unwaveringly focused on customers, we believe we can change the game for good.
Do you have any other information to share with our readers today?
As mission-driven and responsible lenders, we have a role to play in underserved communities. According to a recent article in Forbes magazine, demographic financing gaps are the largest challenge to American entrepreneurial dynamism. The article points out that SBA loan guarantees are intended to help address financing gaps in the market, but if they are steadily getting larger, they’re likely missing many small businesses who need credit the most. I’m convinced that there’s a real opportunity to produce a lot of wealth in these underserved communities – for both the entrepreneurs in the communities and the businesses that help support their growth. It’s past time to work together and help change the wealth gap in the United States.
For more information, visit the website https://lendwithspark.com