Revamping commercial lending with Able

The commercial lending market is expected to grow by almost 14% per year until 2030—reaching $29,379.83B by that point—and yet the processes and technologies fueling it are antiquated and cumbersome. Forced to compile reams of documents to secure loans, businesses are both frustrated and often driven to avoid loans in general. 

In an interview with The Financial Revolutionist, Able’s Co-Founder and Head, Diego Represas, explains how Able hopes to solve this major problem, outlines the founding team’s path to the product they’ve built, and shares his vision for an impactful and expedited commercial lending market. 

This interview has been edited for length and clarity.

The Financial Revolutionist: Why did you go about building Able?

Able is the most efficient and fastest way to collect and process borrowers’ information, and it's geared towards complex borrowers like those involved in business and commercial loans. 

We've actually homed in to the fact that the biggest single problem there is in your average commercial loan process is not underwriting it or decisioning it, it’s just collecting the mountains of data and paperwork that are required to close one of these transactions. We believe there's an enormous amount of whitespace in the market because nobody's actually solving this problem correctly. 

We want the customer to do a lot less work to get the loan and get a much better experience out of doing it. Avoiding a lot of duplicative work in particular, while the bank does a lot less work on their end as well without changing the process: without changing their underwriting or other steps. 

What’s the specific “why” here? A lot of lending tech startups look at expanding the pool of eligible applications, but it sounds like your intention is more about speed and user experience. 

Through speed eventually, you can reach a bigger slice of the pie, because speed brings efficiencies, brings lower cost of capital, brings more people you can lend to. 

It’s also probably an easier pitch to banks.

It’s definitely an easier pitch: Grab your process, and in 90 days, it's 10% to 20% better all across the board. Nobody can do that right now in the lending world.

What is it about Able that brings that kind of improvement in 90 days?

A lot of this comes down to design culture, engineering culture: everything that has gone into how we build the product. We have a platform that can be white labeled and that has a few different components that are geared towards funds. It’s a solution that is directly for financial institutions. We integrate with the systems you need to integrate with, and we manage the integration so you don't have to set them up. We've taken questions of customization and configuration such that you don't need to hire a developer to customize and configure this for you. You can just do it all in a no-code setup. 

What is it about your founding team’s experience that made this the issue the one you sought to chase?

Prior to working on Able, I was working at Digit, which has a great engineering culture. At the time, I was very familiar with the innovation that was going on in the consumer finance world, and I just kept seeing the business and commercial side really far behind. 

It only came to life when I spoke to one of my cousins who happened to be a commercial lender. He walked me through what it was like to originate one of these loans, and I was floored. I spoke to a few banks, and they all have the same problem. This is an endemic problem for the market, and that’s how we got started on it. 

It was tempting to make our own bank and be our own lender, like Mercury, and start giving our own loans. But there are many reasons why we decided explicitly not to do that at all.

Is that primarily a compliance reason?

It comes down to impact. Do you want to leave your legacy as making this thing where you had a bank that made a small fraction of loans fast, or do you want to leave a legacy where 25% of the market, or 50% or market, uses your software? That to me seemed a lot more exciting. 

What currently makes commercial lending so arcane or inefficient?

In the United States, when you're going to secure a loan, you're going to have to gather documentation on the collateral upon which it's going to be secured. You need documentation of the asset that is going to be used to underwrite it. In many countries, you fundamentally can't secure loans, which means you will never collect this information, but it also means you fundamentally cannot issue a low-cost access to capital, because the legal infrastructure required to go and sue collateral does not exist. 

That also explains why in this initial stage of Able’s path you're looking at the United States, where you can have secured loans, and therefore the idea of seeking alternative data to expand the pool is less of a prerogative than it would be somewhere else. 

Able is probably one of the only solutions where we can bring change without having to change your credit box. When you start bringing alternative data, you have to measure the risk of it. And there’s risk whenever you bring alternative data into the equation, because maybe the alternative data paints a great picture today, but you need years and years of data to build an idea of the variances of how it’ll go through recessions and things like that. The hands of time need to work their way in this as well, because there's only so much you can observe within any given unit of time. 

Well, credit scores are their own black box. 

I have my own comments on the credit score. It does leave a lot of people out of the system. But if you think about how commercial loans are done, they incorporate so much more information than like your average retail loan.

Where do you see Able two years down the line?

It comes down to that mission. If you can grab a large chunk of markets and the commercial banks in the United States and you can make the number one process through which they distribute capital 1% cheaper, that means lending is 1% cheaper. That is hugely impactful.