A few weeks ago, Congress authorized $349 billion in payroll protection for small businesses. Unfortunately, many financial institutions and their small business clients walked away empty-handed. One reason for this? An inadequate technological infrastructure. Simply put, a lot of banks and credit unions didn’t have the required SBA PPP loan processing software they needed to handle loan applications.
Now Congress is ready to approve an additional $310 billion of funding this week. $60 billion of that fund is earmarked for community banks and credit unions. Specifically 30$ billion for financial institutions with $10 billion to $50 billion in assets and another $30 billion set aside for financial institutions with under $10 billion in assets.
And yet, it’s not too late for lenders to adopt the SBA PPP technology they require, but only if they act fast. Companies like MeridianLink provide turnkey digital lending solutions, which can be LIVE in as little as 48 hours. Digital banking technology gives lenders the automation they need to accept, process, and submit via the SBA E-Tran portal large volumes of loan applications, and to ensure their small business clients are well-served even in a time of crisis.
Learn more about the role SBA PPP technology can play in our current crisis. Read the full post from the digital banking experts at MeridianLink.
Many Banks Missed Out on the PPP Loans— and Lack of Technology Could Be to Blame
Already we’ve seen some unprecedented efforts by the American government to help citizens and businesses weather the economic toll of COVID-19. One of the most high-profile examples is the Paycheck Protection Program (PPP), an emergency initiative with a $349 billion price tag. This program was rolled out in late March as a way to help small businesses (500 employees or fewer) make payroll, with the goal of stemming the tide of unemployment.
The first round of PPP fundingPPP were depleted in days. The second round of funding to the tune of an additional $310 billion+ is expected to GO_LIVE this week.
While the initial rollout of this program was well-intentioned, the simple reality is that many small businesses didn’t get the help they needed; and many lenders, including community banks and credit unions, were unable to provide their consumers with the help they required.
Why all the problems? Why did so many business owners walk away empty-handed? There are a number of factors involved, but something that can’t go unnoticed is the role of technology. Simply put, a lot of banks and credit unions missed out because they didn’t have the technological infrastructure in place to accept, process and submit PPP loan applications via SBA’s E-Tran portal.
The Role of SBA PPP Technology
A Yahoo Finance article highlights the problem: “When the starting light turned green, banks weren’t prepared to handle the flood of applications. By Friday morning, a number of banks were either not accepting loans yet, or having issues with their loan application pages” (Banks were supposed to begin processing applications at midnight on Thursday.)
Even major banks, including Chase, Citi, and Wells Fargo, were caught off guard, unable to begin processing PPP loan applications in a timely manner. Among smaller, community banks and credit unions, there was a similar lack of readiness.
And once lending institutions did have their loan application pages up and running, they were beset with far too many applicants for them to keep up; Bank of America reported more than 10,000 applications in the first hour. Many applicants were turned away because they did not have outstanding loans with the bank, something for which Bank of America drew heavy criticism.
The simple reality is that processing high volumes of loans is something that takes a robust technological framework, but many lending institutions are a little bit behind the eight-ball when it comes to digital banking. That’s something that proved devastating in the early days of the PPP loans.
The Case for SBA PPP Software
The good news in all of this is that there are companies, like MeridianLink, that provide the necessary SBS PPP software as service (Saas). MeridianLink provide banks and credit unions with a turnkey solution that can be live in as little as 48 hours!
The next round of funding is set to start this week, so financial institutions must act at warp speed to participate. And, after this stimulus is gone, there must be preparedness for potential loan forgiveness programs
Some of the key features in our SBA PPP technology include:
- Delivers mobile, online-only SBA PPP applications
- Syncs with the SBA to submit the loan through the E-Tran platform
- Offers eSignatures for SBA Form 2483 and some of the documents that are required
- Automates workflow and provides business owners with a list of needed documents
- Allows business owners to securely upload any of the requested paperwork
- Can be branded with the logo and colors of the credit union or the bank
- Comes with training for your team members
Find Out More About Loan Origination Systems
Indeed, the PPP loans aside, many banks and credit unions have discovered during this pandemic that digital lending can be extremely advantageous, allowing consumers to address their financial needs and institutions to grow their volume even in an era of social distancing.
A lot of banks and business owners missed out on PPP loans, simply because financial institutions didn’t have the right digital technology in place. You don’t have to let that happen again. To learn more, contact us today to inquire about the MeridianLink SBA PPP Fast Track solution.