Banks and fintechs brace for surge of SBA loan applications
Banks and fintechs are bracing for an influx of small business loan applications ahead of the launch of the $ 350 billion paycheck protection program, aimed at helping businesses hit by the coronavirus pandemic.
The program, which is part of the $ 2.2 trillion stimulus package, could be operational this week, Treasury Secretary Steven Mnuchin said. Fox news on Sunday.
Mnuchin also provided clarification on the type of lenders who could help with the program, which allows the SBA to distribute funds to small businesses with 500 or fewer employees.
“It will be a very simple process where small business owners can go to any of the existing SBA lenders, but they can also go to any FDIC insured institution, any credit union and to any fintech lender who has signed up for this program, “he said.
The comments are good news for the fintech industry, which has been pushing for the opportunity to help with the Coronavirus Aid, Relief and Economic Security Act (CARES).
However, according to the bill, it is up to the SBA and the Treasury Department to determine which fintech lenders are qualified to process, close, disburse, and manage loans made with the SBA’s guarantee.
“Now is not the time to debate the definition of a bank, this is the time to help small businesses,” said Sam Taussig, head of global policy at Kabbage. Bank dive Last week.
As small businesses across the country shut down amid the pandemic, many fintech lenders have expressed concern that traditional lenders may not be able to process loans fast enough to get them the money they need.
The Numerated digital lending platform is already seeing an influx of banks interested in using its technology to meet demand from businesses seeking CARES Act loans.
The company said it has adapted its technology to the Paycheck Protection Program to help banks speed up the loan application process.
“Prior to launching our CARES Act lending solution last week, we had 20 banks leveraging our digital lending and digital account opening platform ranging from $ 150 million to $ 55 billion in assets. Almost all of them will implement our solution. CEO Dan O’Malley told Banking Dive.
“Additionally, we have spoken with 200 banks of all sizes in the past two days alone and are working as quickly as possible to go through the procurement process to add them to our launch queue. for this new SBA [Paycheck Protection Program] product, ”O’Malley said.
The company said 10% of all SBA 7 (a) loans have gone through its platform in the past five years.
“If banks don’t embrace the technology to efficiently process applications and streamline disclosures and documents for these CARES Act loans, they will quickly be overwhelmed,” O’Malley said. “It’s also worth noting that banks that choose not to support these loans will frustrate their customers, and we’ll likely see a lot of business banking relationships change hands as a result.”
The NYMBUS core banking platform has also launched an automated loan approval platform for banks looking to offer loans.
“Participating financial institutions are simply given a link to a portal to direct their small business clients, where requests can be submitted and immediately processed online,” the company said in a statement.
“In this unprecedented time, we are all looking for ways to support each other,” David Mitchell, president of NYMBUS, said in a statement. “We already have the digital tools and comprehensive remote processing services in place to handle the urgency of putting these vital federal funds in the hands of small business owners.”
The two companies have already had talks with the Treasury, sources said. CNN Affairs.
Square CEO Jack Dorsey tweeted his desire to help the recovery on Thursday.
“People need help immediately,” wrote Dorsey, who is also a co-founder and CEO of Twitter. “The technology is there to provide most people with money today (even those who don’t have a bank account). Square and many of our peers can do it. US government: let’s help each other. “