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PPP provides an unprecedented opportunity to grow business banking relationships

With the SBA accepting applications for the second round of PPP loans through the end of March, lenders should prepare for another influx

To date, more than $525B in Paycheck Protection Program (PPP) funds have been made available to help U.S. businesses in the wake of the economic downturn caused by the COVID pandemic. With the U.S. Small Business Administration (SBA) accepting applications for the second round of PPP loans through the end of March, lenders should be preparing for another influx in SBA loan requests if they have not yet done so.  

With the impact of the pandemic continuing to drag on, many business owners are applying for PPP loans from multiple institutions and working with the one that accepts and processes the application the fastest. While a business banking customer may prefer to work with their existing institution, if the bank takes too long or the process is too cumbersome for the borrower, that FI risks losing that customer entirely, leaving a long-term negative impact on the bank’s bottom line.

For financial institutions looking to grow, PPP provides a unique opportunity to generate some initial revenue (typically derived as a percentage of loan amount) and more importantly, potentially add a host of long-term business banking customers. The key for institutions is in understanding what needs to be in place to ensure that both they – and the small businesses that are applying – have an optimal PPP experience.

This starts by ensuring that a frictionless experience exists between the bank’s email marketing or advertising platform and the PPP application portal to begin the process. Depending on the size of the market and the scope of an advertising or marketing campaign, some financial institutions could expect to receive thousands of PPP applications. As an example, we have worked with a $13B bank that recorded more than 5,000 applications within a single day.

To manage this level of volume, FIs must first ensure that they have a user-friendly website capable of successfully handling the influx of concurrent loan requests. The bank’s website is on the front line of the PPP application process and could be a business owner’s determining factor when deciding where to apply. Because time is of the essence for businesses that are struggling to survive and in need of immediate funds to continue operations during the pandemic, an application process that can be completed in one visit to the application portal is an imperative.

Once a business owner submits an application through the portal, banks must be able to tie this back into the institution’s internal workflows by automatically triggering a workflow within the institution’s back-end operations. This alleviates potential inefficiencies or delays that can obstruct the FI’s management of PPP loans, including overall accuracy, workload and response times.

More than just securing the leads and applications, however, financial institutions need automated processes in place to then successfully manage the loans to completion. Automating the collection and collaboration of loan documents provides visibility for managers into the lifecycle of the loans, including the number of applications open and the status of each individual loan.

With a new administration in place, it is uncertain what additional relief programs may be on the horizon. By taking time to evaluate existing technology and operational workflows to ensure they are configurable and scalable to support PPP, financial institutions will be better positioned to accommodate future programs. There is no doubt that the pandemic will leave a lasting impact on the financial services landscape. For those financial institutions keen on protecting or even expanding their business banking customer base, the steps they take today to support business owners will likely produce valuable dividends in the future.

This article was written by David Brooks. Brooks is founder and CEO of Cirrus, a fintech provider of cloud-based document management software.

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