On Sunday, Dec. 27, President Trump signed the Consolidated Appropriations Act 2021 into law. Although the situation continues to evolve daily, the act includes a second round of Paycheck Protection Program loans, presenting lenders with an opportunity … if their technology is up to the task.
Let’s start 2021 with a talk about opportunity.
Seriously, stick with us. Take the wildly successful musical “Hamilton,” which is all about looking for opportunities during a crisis. Disney premiered a film version of the musical on their streaming service, and millions of streamers clicked approval. Even better, other studios saw an opportunity and began streaming their new movies and shows, keeping moviegoers safe (and occupied) during the shutdowns.
Speaking of opportunities, here’s a story of another one: In March, the Paycheck Protection Program (PPP) was established as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act. Eventually totaling $669 billion in business loans, the program aimed to help self-employed workers, business owners and eligible businesses and nonprofits weather the economic effects of the COVID-19 outbreak.
Unfortunately, many financial institutions and their small business clients walked away empty-handed after the program ended in August.
What was one reason for this missed opportunity? Inadequate lending technological infrastructure.
Simply put, a lot of banks and credit unions didn’t have an efficient Small Business Administration's (SBA) PPP loan processing software they needed to handle loan applications.
It’s not too late for lenders to adopt the SBA PPP technology they require, but they need to act fast: when the Consolidated Appropriations Act of 2021 was passed on Dec. 27, it cleared the way for another round of PPP loans.
A Brief Look at the Next Round of SBA PPP
When the PPP, was first rolled out in March 2020, it came with $349 billion in loans. However, the first round of funding was depleted in days, spurring an additional $310 billion in funding added in April.
While the initial rollout of this program was well-intentioned, many lenders, including community banks and credit unions, were unable to provide their consumers with the help they required.
Why? Well, there were 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.
“When the starting light turned green, banks weren’t prepared to handle the flood of applications, wrote Yahoo Finance in a recent article “By Friday morning, a number of banks were either not accepting loans yet, or having issues with their loan application pages”
Even Big Banks Weren’t Ready for PPP Loan Originations
It may be a small consolation, but even large banking players like Chase, Citi, and Wells Fargo, were caught flat-footed, unable to begin processing PPP loan applications in a timely manner.
Consider Bank of America: while their loan application pages were up and running, they were beset with far too many applicants for them to keep up, receiving 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 requires a robust technological framework. Many financial institutions are a little bit behind the eight-ball when it comes to digital banking.
With Modern Loan Origination Software, Change Becomes Opportunity
For lenders, it’s not too late to capitalize on the recent PPP legislation. Many modern loan processing programs can get up and running fairly quickly, and as we wrote earlier, this situation is one which evolves daily.
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.
If you’re shopping for a new PPP loan software, here are some features to keep in mind:
- Offers mobile friendly SBA PPP applications
- Syncs with the SBA to submit the loan through the E-Tran platform
- Offers electronic signatures for SBA Form 2483 and other documents
- Automates workflow and provides business owners with a list of needed documents
- Allows business owners to securely upload any of the required paperwork
- Can be branded with the logo and colors of your organization
- Comes with training for your team members
Taking the Fast Track with Loan Origination Systems
MeridianLink’s Fast Track web-based digital SBA PPP lending solution was developed as direct response to the PPP. Offering electronic signatures, syncing with SBA systems and implementation within two days, it does not require integration with other MeridianLink solutions.
View our on-demand webinar "SBA PPP Fast Track - Be Ready from the Start" to get a glimpse of the SBA PPP Loan Software.