In the first round of the paycheck protection program, First Bank in Hamilton, New Jersey, relied on its bankers rather than technology to help small businesses stay afloat.
This manual work “ironically turned out to be a good thing, because we had people helping small businesses through the process, and they had a number and a name to talk to,” said Patrick Ryan, president and CEO of the bank’s assets of $ 2.3 billion. . “I think it helped alleviate some of the fear and anxiety the first time around.”
She made 600 loans in the first month of the PPP, but “as you might expect, a manual process is not the most efficient process,” Ryan said.
But First Bank – along with a number of other smaller banks, including the Northeast Bank in Portland, Maine – is changing course and relying on software to make loans for the new phase of the PPP. The last round open to community development financial institutions, minority deposit-taking institutions and similar lenders on Monday and expected to be extended to all lenders by early next week.
Software vendors including Biz2Credit and Numerated have reported an increase in customer numbers and are updating their platforms to accommodate regular borrowers and new eligible applicants such as 501 (c) (6) organizations and others. At their basic level, such platforms enable banks to accept applications under the aid program, make loans, automate the underwriting process, collect documents and pass information to the Small Business Administration processing system.
Still, banks like First see merit in balancing technology with the human touch. “We’re always going to make sure people have a banker to talk to if they have any questions, but I think we’ll be a little more streamlined this time around,” Ryan said.
From manual to automatic
First Bank first turned to Numerated when processing loan cancellation requests and decided to use its lending platform for the PPP relaunch as well. Ryan chose Boston-based Numerated in part because he preferred to deal with an established tech company rather than a consulting firm that would outsource the tech part.
However, his team will not send new clients to the portal until they have first connected them to a personal banker.
“The best customer experience on PPP is going to be a combination of having a personal banker who is there to help them if they need it as well as leveraging technology to make the process as efficient as possible,” Ryan said. .
The Northeast Bank handled the first rounds of PPP largely through email and PDF forms.
“It was heavy and a huge amount of work,” said Patrick Dignan, executive vice president and chief credit officer of Northeast, with $ 1.3 billion in assets.
When the first funding pot was replenished in the spring, Northeast integrated DocuSign and other tools to make the application process easier for clients. But much of the know-your-customer checks, bank account verifications, funding and other processes were still done manually.
In autumn, Northeast worked with ACAP, a company created to manage PPP loans, to find a software vendor for the next iteration of PPP. ACAP buys and manages PPP loans with its partner The Loan Source.
After seeing several demos, he landed on Biz2Credit, a New York finance provider that matches businesses with sources of capital. Dignan liked that Biz2Credit consolidates the entire workflow into a single repository, with an electronic application, the ability to upload documents, the ability to retrieve documents to verify the business and more. The platform also included a loan calculator, electronic signature mechanism, and tools that helped lenders assess the accuracy of an application and communicate effectively with borrowers. Another plus for Dignan: Biz2Credit has integrated this platform with its automated loan remission portal.
“We learned a lot from the last round,” said Dignan. “We took a lot of the frustration out of the experience by making things more intuitive and the questions clearer for the borrower. “
How suppliers are adapting
Over the past few weeks and months, vendors have improved their offerings to meet growing demand and adapt to a more complicated funding cycle.
In this iteration of PPP, there is more flexibility in how borrowers can calculate payroll and which industries, namely restaurants and hotels, are entitled to more money. The loans will cover a wider range of expenses, new types of organizations such as housing co-ops and allow existing PPP borrowers to apply for a loan. second loan, provided that they meet certain conditions, including a 25% drop in turnover over at least one of the four quarters of 2020.
“This flexibility is good, but it’s, as we would say in Boston, very confusing,” said Dan O’Malley, CEO of Numerated.
Numerated acquired just under 100 clients for the first round of PPP; the number has since grown to 122. Its clients include banks, credit unions and more recently non-bank lenders. Numerated has improved the self-service functionality for borrowers by mixing or removing questions as needed and incorporating explanations such as the different ways a borrower can provide payroll information. Where possible, Numerated pre-populates applications with bank master data, previous PPP loan data, and government deposits.
Other providers have expanded their services since the first round.
Biz2Credit worked with the American Institute of CPAs and CPA.com to produce CPALoanPortal.com last summer to help accountants provide PPP consultancy services to their clients.
For its usual PPP platform, Biz2Credit started with 15 to 20 banks last spring. There are now more than 200.
Other lenders have strengthened their partnerships to better serve clients. Jack Henry Lending, for example, refers banks that are unable or unwilling to fund loans themselves to Biz2Credit. The bank will accept loan applications digitally, but decisions and funding are made through Biz2Credit. Banks have access to a portal that allows them to view the status of individual borrowers.
Vikar Technologies in Old Bridge, NJ deployed software to automate lending forgiveness applications last summer. Glenn Bolstad, CEO of Vikar, said banks approached him in late 2020 to ask for a similar solution for origination of loans when the next iteration of the PPP begins.
When borrowers log into Vikar’s program, they will be asked simple questions, such as the type of business entity, so that Vikar can collect the required information, much like TurboTax guides users through completing their tax forms, said Bolstad. Borrowers will digitally sign their forms and upload the documents before the lender reviews and submits the application.
“It’s automated from end to end, back and forth, to better track the volume of loans that [lenders] anticipate, ”Bolstad said.
He said Vikar now has more than the 18 customers he brought in to make amends with this new combination product.
Dignan, of Northeast Bank, summarizes in a few words the advantages of PPP technology.
“It increases efficiency, reduces errors and improves mental health,” he said.