Lending Automation Processing System (LAPS)

Table of Contents

General
   LAPS® Modules and Features                    LAPS® Merchant Funding System
   LAPS® Objectives and Benefits
   LAPS® Technology Environment   

General:

LAPS® is the most powerful, complete and comprehensive Lending solution in the market. Released in the 4th Quarter of 2000, it is a truly integrated solution covering the full lending cycle from loan origination through loan application process, risk assessment, decision-making,  monitoring and management control of approved loans. 

LAPS® can handle Personal, Construction and Commercial lending. It is extremely scalable, serving organizations from 2 to 2000 branches and more - it can grow to match the customer's number of branches/locations. All this can be accomplished without the need to modify a line of code. It is designed to facilitate rapid deployment and customization.

LAPS® is structured with 5 levels of authorization for ease in management of branch operations. The ability to control individual loan types, lending policies and approval classifications remain with the senior management of the lender.

LAPS® Modules and Features:

LAPS® is a comprehensive application that automates the entire lending cycle including:

• Applicant Data Collection
• Loan Application Processing
• Decision Making
• Follow up, Management and Control

Its features include:

• Comprehensive loan application forms to suit a variety of loan
• Risk Management for all Commercial and Personal loans
• Applicant project proposal analysis
• Powerful workflow process
• Run application on internet/intranet environments
• Flexible General Ledger Accounting interface
• Powerful Management control
• Decision support system for evaluating branch performance, loan product performance and loan officers' performance
• Loan Service, collections and follow up
• Post disbursal Control
• Least customization to bring branches online after mergers or acquisitions
• Document Management
• Document Scanning
• Voice Activated Notes
• Instant deployment of new loan products

LAPS Merchant Funding System:

Today's funding institutions face competitive challenges that were unheard of a few years ago. Cash advance departments are often working with existing systems which are slow, inefficient, or both. Salem Associates is aware that successful competitors need top quality tools, and we have responded by developing LAPS which is our Lending Automation Processing System for merchant funding companies. Our technical analysts spent time carefully observing and documenting the cash advance-processing workflow. Based on input from functional experts in the funding industry we have incorporated many new and innovative features into this exceptional cash advance-processing product.

Our functional architects conceived and developed the solution with the following features & benefits:

• Cash advances structured to suit the merchant’s needs
• Test transactions prior to funding to validate merchant accounts
• Automated collections through multiple collection modes – all done electronically
• Efficient portfolio management and performance monitoring

LAPS provides an integrated and comprehensive solution to all the needs of a funding institution. It is scalable and provides a good fit for any size of organization - from small community organizations to multilevel, nationwide funding institutions. All this can be accomplished without the need to touch a line of code.

This automated lending solution features:

• Merchant Eligibility – Pre-screening, documents and underwriting
• Status Enquiry, Commission Payments
• Repayment & Collections – Collection Modes
• Processors, Lockbox Operators & ACH Transactions
• Interface Capability

Merchant Eligibility:

Pre-Screening: LAPS enables the user to pre-qualify a merchant on a combination of multiple parameters. Some of the parameters used in LAPS are:

• FICO Score
• BK Status
• Foreclosure Status
• Excessive Collections
• Excessive Delinquencies on Mortgage / Auto loans

Failure in any one of the above disqualifies the merchant and the Account Executive notifies the ISO (an external sales agent of the organization) that the request is declined.

Documents: If the application is accepted, the Account Executive can review the same for completion. LAPS enables collection of the following documents from the merchant (through the ISO).

• Complete application
• 4 months most recent processing statements (12 months if business is seasonal)
• Clear copy of drivers license
• Voided business check
• Signed contract
• Most recent bank statement (,must correspond with the processing statement)
• Business License
• Signed Authorization Form from the merchant

Underwriting: Once the documents are received and verified, the application is submitted for underwriting review. The underwriter may ask for more documents, if required. The ISO is notified of the new terms and once accepted or if no new terms are specified, the merchant and his / her landlord can be interviewed. If the interviews do not raise any red flags, the application is submitted for Repayment Method (test collections) set up via Split Batch, ACH or Lock Box. If declined, the ISO is notified through the Account Executive.

Repayment Method set up via Split Batch is done by transacting with the processor for a few collections even before the fund is disbursed. If the transactions are successful then the Underwriter can give the final approval. The underwriter may also request for additional info at this stage before giving a final approval. The merchant can be funded through a wire transfer to his bank account. The underwriter also can determine the fund amount using a calculator with a pre-defined formula.

Work Flow: A loan processing cycle typically involves movement of information from one reviewer to another. As the value of the loan amount increases the workflow gets more complex. Physical movement of the application and supporting documents has been a required part of the process in the past. With LAPS the entire flow of information can be electronic.

Each function in the processing chain is defined as a "flow point" and the application package is sent to the next person in the chain upon completion of a particular action. The time allowed for each action can be set and the designated supervisor is alerted in case of delay at any of the "flow points". In this way, the system assures that there are no delays in the processing of the loan. Efficiency reports can be generated to reveal any recurring delays at specific "flow points" so that corrective action can be taken.

The work flow module facilitates electronic processing of the loan application between several "work flow points" which can be set up to meet the unique needs of every organization depending on their size, structure and review / approval methodology. It provides the capability to review any application at whatever stage it may be and ascertain reasons for the stage at which an application is presently in. Reports can be run to identify performance of employees, products, branches in any combination, which can be a useful tool to reward productivity as well as in staffing decisions.

Status Enquiry:

During the entire above process, the ISO / Account Executive will be able to view the status of the merchant’s application online. However, access to the ISO and the AE will be restricted with an enquiry screen with only specific display of relevant data. LAPS provides an offline module to the external users for status enquiry on the applications submitted by them.

Commission: The ISO / Agent also is eligible for a commission based on a pre-agreed percentage. This commission amount will accrue to the ISO’s / Agent’s account and may be disbursed periodically by the authorized personnel in the funding organization. The commission may be spread over the period of the entire fund term – as and when the funding organization collects from the merchant, commission may be calculated and disbursed to the ISO / Agent.

Repayment and Collection:

Collection Modes: LAPS enables collection of the repayment amounts on a daily basis in multiple methods:
• Through Credit Card Processors
• Through Lock Box Operators (fed by the Processors)
• ACH Transfers
• Direct Payment by the merchants

The collection is based only on the credit card transactions and not on cash transactions of the merchant.

Processors:

Processors are the credit cards transaction processing companies and may represent more than one credit card provider. For example, one processor may process transactions of Visa, MasterCard and Amex. There are a number of such processors and the funding organization enters into a contract with some of these processors to collect a portion of the merchant’s transactions every day. The contracted processors will then do a split batch uploading of amounts to the merchant (the processors pay the merchants immediately based on a risk factor and later collect the amount from the credit card companies) as well as to the funding organization at the pre-agreed percentage. The processor then sends a CSV file to the funding organization listing all the transactions and the amounts credited to the funding organization’s bank account for any particular day.

Lock Box:

Some processors may not be willing to enter into direct contract with the funding organization. These processors send their payments and details to Lock Box operators. Multiple processors’ payments are then collected through lock box operators. LAPS enables this collection process similar to processors and follows the same steps in reconciliations of merchant accounts.

ACH Transfers:

LAPS will automate this process once the transaction details of the merchants are entered in a pre-formatted sheet. LAPS will automatically populate the ACH Transaction sheet and upload the same into the bank’s site. LAPS will also track the credits received from the bank periodically to locate any ‘fails’. Once a fail is located LAPS will offer three options to the user – may reprocess the transaction for the same amount with the next ACH batch OR reprocess the transaction for the same amount in a specified batch in future OR define a new payment plan for the ‘fail’. Depending on the option selected by the user LAPS will perform the appropriate task and update the merchant account accordingly.

Interfaces:

LAPS can be interfaced to multiple external systems. LAPS is already interfaced with many credit bureaus for downloading credit reports or credit score. LAPS can be interfaced with any accounting system such as QuickBooks, etc. LAPS is also interfaced with NAMAA database to identify Bad or Tag merchants. LAPS will enable the user to check Rewards site to get details of merchants enrolled in the Rewards program.

Technical Architecture:

LAPS has been designed and developed using the latest hardware and software technologies. The system is based on the operating systems and protocols of the Internet and is well suited to a local intranet environment. With an appropriate web server in place, installation of the Internet module allows applicants to apply for loans from their homes.

LAPS has been developed using Java, JSP and EJB components and conforms to J2EE standards. Program execution is carried out on the server side and can be run using Web Application Servers such as Oracle OC4J. It has been designed with the understanding that banking of the future will rely heavily on networked systems. Although we understand that no technical environment lasts forever, this system is, and will remain competitive for many years.

Architecture:                       J2EE compliant
Programming Language        JAVA, EJB, JSP, Servlets, XML, SOAP,
Hardware Platform:              Windows, UNIX, AIX, LINUX
Web/Application Server        JBoss/Tomcat Web Application Server
Database:                           MS SQL Server 2005
Browser:                             IE browser Version 6.0 and above