The adoption of virtual employees in private lending offers myriad benefits, including cost savings, access to a global talent pool, enhanced versatility, and improved operational productivity.
You are growing your business by raising capital, finding and funding good deals and servicing both your borrowers and investors. Maybe you're a broker, finding good deals and sending them to lenders. Either way, you need to hire a staff to help you make loans.
That staff does not have to be onsite occupying office space, however, to help you move your business forward. More and more industries, including private lending, are reaping the benefits of virtual employees-professionals who perform their job functions outside of a traditional office environment.
UNDERSTANDING VIRTUAL EMPLOYEES IN PRIVATE LENDING
In the context of private lending, virtual employees can undertake a wide range of tasks. As a private lender, here are some key ones to consider:
Loan Processing. You can offload your loan processing to a virtual employee. Loan documents are mostly scanned in (or can be!), so this would be a perfect opportunity for a virtual employee to complete the underwriting process and monitor compliance.
Underwriting. Virtual employees are perfect for underwriting your loans. Either you have an underwriting manual or they can interview you and write one. From there, they can underwrite your loans according to your specifications.
Loan Officer Assistants. These paperwork monsters form the complement to your loan officers, allowing your loan officers to sell while their assistants chase down the needed paperwork to give to your underwriters.
Your entire back office, basically. You can also hire virtual employees for a variety of back-office needs, including accounting, accounts payable, accounts receivable, data
entry, receptionist, and many other positions.
The key advantage of virtual employees is their ability to provide flexible, scalable, and cost-effective labor solutions.
BENEFITS OF USING VIRTUAL EMPLOYEES
Cost Efficiency. One of the most compelling benefits of employing virtual staff is the significant reduction in operational costs. Virtual employees eliminate the need for physical office space, utility expenses, and other overhead costs associated with maintaining a traditional office environment. Additionally, the ability to tap into a global talent pool often allows for more competitive salary structures, further reducing labor costs.
Access to a Global Talent Pool. Virtual employment breaks down geographical barriers, enabling private lenders to access a vast pool of skilled professionals from around the world. This global reach allows for the recruitment of top talent with specialized skills and expertise in private lending practices, regulatory compliance, and financial analysis, among others.
Enhanced Flexibility and Scalability.
The virtual employment model offers unparalleled flexibility, allowing private lenders to quickly scale their workforce up or down based on business needs. This agility is particularly beneficial in the private lending sector, where market demands can fluctuate rapidly. Virtual employees can be engaged on a project basis, part-time, or full time, providing lenders with the ability to adapt their staffing levels to current operational requirements.
Improved Operational Efficiency. Virtual employees can contribute to enhanced operational efficiency through the adoption of advanced technology and automation tools. Remote work environments often necessitate the use of cutting-edge software and systems for communication, project management, and data analysis, which can streamline processes and improve productivity.
IMPLEMENTING A VIRTUAL EMPLOYEE STRATEGY
Identify Suitable Roles. The first step in implementing a virtual employee strategy is to identify roles within the private lending operation that can be effectively performed remotely. Administrative tasks, customer support, loan processing, underwriting, and compliance are among the functions that can be easily transitioned to a virtual setting.
Leverage Technology. Successful integration of virtual employees requires robust technological infrastructure. Key components include secure cloud-based systems for data storage and sharing, communication tools such as video conferencing (Teams, Zoom) and instant messaging (Teams, Slack), and project management software (Monday, Trello, Asana, etc.) to track tasks and deadlines.
Establish Clear Policies and Procedures. Clear policies and procedures are essential for managing a virtual workforce effectively. These should cover aspects such as work hours, communication protocols, data security measures, and performance evaluation criteria. Establishing a comprehensive onboarding process is also crucial to ensure that virtual employees understand their roles, responsibilities, and the tools at their disposal.
Foster Communication and Collaboration. Maintaining open lines of communication and fostering a collaborative work environment are critical for the success of a virtual team. Regular team meetings, one-on-one check-ins, and the use of collaborative platforms can help keep virtual employees engaged and aligned with the company's goals and objectives.
BEST PRACTICES FOR MAXIMIZING THE POTENTIAL OF VIRTUAL EMPLOYEES
Invest in Training and Development. Investing in the ongoing training and professional development of virtual employees is vital to keeping them updated on industry trends, regulatory changes, and new technologies. Doing so not only enhances their performance but also contributes to job satisfaction and retention.
Cultivate a Strong Company Culture. Creating a strong company culture and belonging can be challenging with a virtual workforce. Implementing virtual team-building activities, recognizing achievements, and encouraging social interaction can help bridge the gap and foster a positive work environment.
Monitor Performance and Provide Feedback. Regularly monitoring performance and providing constructive feedback are essential to ensure the effectiveness of virtual employees. Setting clear performance metrics and conducting periodic reviews can help identify areas for improvement and acknowledge accomplishments.
Ensure Compliance and Data Security. Complying with regulatory requirements and ensuring data security are paramount in the private lending industry. Virtual employees should be trained in compliance standards and data protection protocols, and access to sensitive information should be strictly controlled.
A LENDIN6 CASE STUDY AT SCALE: STEALTH FINANCIAL
Stealth Financial is a private lender that makes private loans. Because it needed to save on operational capital, Stealth turned to a virtual employee solution. They housed several departments, including accounting, loan officers, underwriting, and others.
After completing a 50-page underwriting manual, the underwriting manager trained all underwriters to complete underwriting based on the files given to them.
The loan officer assistants were all trained to assist the loan officers in chasing paperwork and appointments, freeing up loan officers to talk with potential borrowers to get them to the finish line, increasing productivity by 40%. In addition, Stealth hired loan officer assistants to work two shifts so they could cover 16 hours, creating efficiencies at scale at the price of a single U.S. employee.
Finally, Stealth rounded out its team by placing virtual employees in all areas, including receptionist, bookkeeping, AP, quality control, data analytics, financial analyst, and web developers. Stealth said that with the virtual employee strategy, "we saved 60% off our payroll costs, creating redundancy we could never afford with U.S. employees, and we did not have to give up large parts of our company to private equity as a result."
Stealth reported that it carries a 45% NOI on its lending business as a result of embracing virtual employees-and you can too.
DON'T THINK YOU CAN? YOUR COMPETITORS THINK THEY CAN.
If don't think you can harness the power and cost-effectiveness of virtual employees, look around. Your competitors are, and they are delivering the same product cheaper and faster than you.
How will you compete against them? Either you will have to automate better or you, too, will have to embrace the global virtual employee solution. You won't be able to remain competitive in the market space if you don't.
The adoption of virtual employees in private lending offers myriad benefits, including cost savings, access to a global talent pool, enhanced flexibility, and improved operational efficiency. By carefully implementing a virtual employee strategy and adhering to best practices, private lenders can leverage this innovative approach to gain a competitive edge in the market. As the financial industry continues to evolve, the integration of virtual employees will undoubtedly play a pivotal role in shaping the future of private lending.
By Anthony F. Geraci
Private Lender, The Official Magazine of AAPL
Published on April 8, 2024
Spring 2024, p. 88-90
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