Small businesses overwhelmed U.S. financial institutions as they scrambled to apply for Paycheck Protection Program (PPP) loans under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. When the program went live on Friday (April 3), only two FIs, Bank of America and JPMorgan Chase, had been able to begin accepting applications — Bank of America saw a whopping $6 billion worth of applications in only a few hours, ending Friday with $32.6 billion in applications.
It was a shaky start for the initiative that was designed to ease the pain of the coronavirus pandemic, with small businesses expressing frustration at the “nightmare” process of attempting to access a portion of the $349 billion available under the legislation.
Bank of America received criticism for initially only allowing existing small and medium-sized businesses (SMBs) to apply. JPMorgan Chase warned customers it would have to wait for Small Business Administration (SBA) guidance before it could start accepting applications. Wells Fargo said the Fed’s cap on growth limited its ability to provide PPP financing. And even as financial institutions began to smooth out the process, the initiative hit another snag Monday when reports emerged that the SBA's computer systems had crashed.
As the nation's traditional financial institutions struggle to cope, alternative lending platforms and other B2B FinTechs are exploring how to put their own technologies to good use. Below, PYMNTS looks at the FinTechs that are collaborating with SMBs and banks to ease friction of the PPP lending process, whether by digitizing applications, supporting underwriting, or streamlining data collection.
Though specializing in accounts payable technology, Bottomline Technologies recently announced that its existing account opening technology has been customized to enable financial institutions to originate PPP loans. Bottomline will deploy its account opening, on-boarding and fraud capabilities to ensure lenders comply with PPP loan requirements and accelerate their Know Your Customer (KYC) needs to provide funding to both new and existing SMB customers. Small businesses, meanwhile, can use the platform to apply online as fewer physical bank branches are available.
Payments and banking technology provider Fiserv said in a recent press release it is equipping its banking customers with tools to accept PPP applications via their websites and online banking platforms, as well as through the Clover platform. Integrating the application process into banks' existing portals means small businesses can more seamlessly apply for a PPP loan, noted Fiserv, whose group president of Account Processing, Todd Horvath, noted, "Helping small businesses quickly and seamlessly apply for much needed PPP loans is a top priority for our financial institution clients, and many are anticipating a high volume of applications."
Marketplace lending company Funding Circle announced the debut of its pre-application service for small businesses interested in obtaining an SBA loan under the PPP. The service aims to help small businesses through the process of applying for a PPP loan from other lenders, though the company is also in the process of obtaining approval to be able to facilitate PPP loans by connecting small businesses to qualified lenders on its platform.
Lendio already secured its approval to facilitate PPP loans, the alternative lender said, noting that small businesses can now apply for a PPP loan on the Lendio platform. Approved SMBs will be connected to a bank or credit union that can facilitate the financing. In addition to the application service, Lendio also revealed it plans to hire as many as 200 full time small business loan agents to ready for anticipated demand in PPP lending.
With a focus on compliance, Wolters Kluwer revealed its new solution to enable financial institutions issue PPP loans to small businesses. Using its TSoftPlus software, Wolters Kluwer's new offering ensures all SBA requirements are met to accelerate the lending process; the company is augmenting the service with free training sessions and webinars designed to help lenders understand the requirements of PPP lending.
FIS is using its Real Time Lending Platform to enable financial institutions to process PPP loans under the CARES Act, the technology firm recently announced. Designed for banks and credit unions, the platform digitizes and automates lending processes, with FIS noting it will waive minimum monthly service charges in April. The firm has also announced a COVID-19 Online Resource Center for its financial institution clients.
Computer Services, Inc.
Computer Services, Inc., also known as CSI, is targeting community banks' PPP lending needs, also configuring its existing lending solution to enable smaller FIs to comply with regulatory requirements. The company said it now allows community banks to accept PPP loan applications and eSignatures online to streamline the lending process for small businesses when using CSI's core banking system to originate SBA loans.
Banking technology provider NYMBUS designed a new platform to help small businesses streamline their PPP loan applications and enable financial institutions to manage them. The company recently announced its SmartLenders program aimed at employers to efficiently gather the information they need to apply for a loan under the CARES Act. SmartLenders then provides that information to lenders, while also enabling underwriting to expedite the process.
Small business lending platform Biz2Credit joins a growing list of alternative lenders designing new platforms to help traditional lenders manage PPP loan applications. Dubbed Biz2X Accelerate, the platform ensures compliance to SBA requirements under the CARES Act with the ability to calculate payroll-related expenses to determine an SMB's eligibility, with third-party data integrations with the IRS and other sources of financial data. Biz2Ctredit said “existing partners” have already signed on to use the solution in the coming weeks.
Data integration technology firm Plaid is putting its capabilities to use by enabling lenders to seamlessly collect small businesses' payroll data as part of the PPP lending process. According to Plaid, the traditional process of aggregating that information can take days or weeks, so Plaid is working on a new process to shorten that timeframe to a few minutes. According to CNBC reports, Plaid's new service has garnered interest from more than 100 lenders, including banks and FinTechs, while the company is also in discussions with payroll providers like ADP.
Digital lending technology company eOriginal announced his week its Rapid Deployment Solution designed to enable lenders to meet the requirements of the Small Business Administration's digital lending under the Paycheck Protection Program. The new service from eOriginal connects lenders and investors to a platform to manage loans and digitize the lending process. According to eOriginal CEO Brian Madocks, two SBA customers have signed on to use the solution so far.