Applying for a business loan or any other type of loan isn’t what it used to be. No more do you have to drive to a bank, sit in an office with a lender, and fill out forms. Today, it can all be done online. Including income and assets verification.
Bank account verification allows banks and lenders to connect with your accounts directly and verify funds. While they still may request bank statements, this process gives them greater confidence in your stated assets. As well, they can use the verification close to the loan’s closing date to confirm that nothing has changed.
As Internet safety and security has advanced, lenders have become more comfortable accepting loan application materials online. But that doesn’t mean that applicants share that comfort! If you’re applying for a loan and the lender has sent a link to a bank verification site, here’s what you need to know.
Bank account verification is an online process that confirms that funds are coming and going from legitimate bank accounts. It confirms account validity, balances, and ownership directly with institutions.
The organization that needs to confirm balances will send a link to an online platform. After you log in, you can search for lenders, credit cards, and other financial institutions where you have deposits or credit balances. The platform asks you to input your username and password for their websites, then it connects with them and confirms details.
Bank account verification has become increasingly common with:
Anytime an organization or individual needs to confirm your assets and liabilities, they may use bank account verification.
Why has bank account verification become so popular? It has several advantages for both lenders and borrowers.
People make mistakes, but if a lender’s assistant inputs an account number incorrectly it can cost you days during the application process. A misplaced account statement, an incorrectly input account number or balance, or a handwritten balance that can’t be read – all of these common mistakes could delay your loan’s funding.
Verification software blocks transactions that don’t match details on record. Then you can double check inputs. If you’re typing in a username and password, you’ll know within a minute or two if you typed incorrectly because the platform won’t be able to connect. There’s no risk of manual error mistakes since balances come directly from the bank.
Verification platforms prevent fraudsters from stealing your identity, or fake applicants from applying loans. Even if someone stole your social security number, it’s unlikely that they could correctly guess all your passwords. Lenders have greater assurance that you are legitimate. Less fraud benefits you in faster approval times and possibly lower rates – if lenders are losing less money to fraudsters, they won’t charge more to try to recover that money.
Lenders, whether it’s banks, credit unions, or other financial institutions, must comply with anti-money laundering regulations. These regulations protect users of the financial system by keeping money “clean,” i.e., not associated with criminal enterprises.
With data verification, you’re not waiting as someone in an office collects a fax, calls the bank to tell them that two pages didn’t come through, and waits for someone to resend it. The old process of validating assets and liabilities could take weeks, or months, and if anything went wrong during the process it added time.
Who wants to sit at their computer hitting “print” for a half hour? Compiling statements and making sure you have all the requested months is time-consuming. But data verification does it all in a matter of minutes.
Lenders analyze past cash flows for certain loan products – such as a merchant cash advance. They may need to examine your past few month’s credit card sales to project future sales. Data verification eliminates the need to manually pull information from a statement and type it into a spreadsheet. The lender can create projections faster and, thus, approve an advance faster.
Yes! Banks and lending institutions partner with verified, encrypted platforms and service providers to enable data verification. They are all subject to extensive testing and regulations. Once you’re on the data verification platform, look for a trust seal that says “safe” or “verified.”
One of the largest companies doing this type of bank verification is Plaid. And according to the National Council on Identity Theft, bank verification is safe. But like with any online technology, make sure you know the company you are working with, and have thoroughly reviewed the company profile and links, and know the individuals you are working with.
If you’re concerned about the link you’ve been sent for verification, check the sender’s email. Scammers will often “spoof,” or fake emails from lending institutions, but there will be a typo, or the website address will be incorrect. Read the email carefully for other indicators – such as misspellings and grammatical mistakes – that could indicate fraud. And you can always call the lending institution to verify that they sent the email.
Bank account verification benefits both lenders and borrowers. It increases the safety and responsiveness of the lending market, resulting in a better outcome for all.
