Preparing for SBA 7(a) Paycheck Protection Program

Financial institutions need to be prepared for the high volume of applications and customer interactions as a result of the new SBA 7 (a) loans offered through the Paycheck Protection. Program. Here are some helpful tips to help.

Businesses all over the country can now apply for financial assistance under the $2.2 trillion Coronavirus Aid, Relief & Economic Security (CARES) Act signed by President Trump on March 27. This unprecedented relief package offers help to individuals and businesses impacted by the COVID-19 pandemic. One of the provisions of the Act is the “Paycheck Protection Program,” which will be administered by the Small Business Administration (SBA) and offer forgivable loans for businesses with fewer than 500 employees to help them cover near-term operation expenses and encourage them to retain employees during this crisis. Businesses will apply for the loans through their banks.

Lenders should expect a high volume of application activity and customer interaction during this period, and ensure ample operational processes are in place to handle this influx. Here are some things financial institutions can do to better prepare themselves:

Provide online information for current and potential customers

Many individuals and businesses are effected by this crisis and will have questions regarding their eligibility, the application process, how long it will take to collect and more. They will turn to their financial institution for many of these answers. Many banks have set up a page on their websites with FAQs and other data consumers may be looking for. This is a great offering for consumers that already trust you, while build trust amongst new potential customers. This is also an opportunity to clarify your institution’s own guidelines, while making clear eligibility requirements perhaps alleviating the impending volume of loans.

Make sure technology systems can scale and comply with lending rules

In the current conditions, although the U.S. Treasury Department and the SBA have issued guidance around the Paycheck Protection Program, this is still an unprecedented stimulus package with many uncertainties ahead. Clarification on application rules and the general process is very fluid and regulations could change as the program evolves. As such, your technology systems should be flexible enough to adapt to ever-changing lending rules. With antiquated, hard-coded systems, adjusting a workflow is not an easy endeavor, and you put your institution at risk of falling out of compliance. It’s vital that your technology be able to be configured easily, with zero disruption to operations, ensuring workflows stay in compliance with new rules and regulations.

Train all personnel to deal with the spike of applications expected

Because these Paycheck Protection Program loans will be given on a first-come, first served basis, according to a senior SBA official, banks will have to handle a large volume of applications in a very short amount of time. Given the urgency for small businesses seeking loans, it’s important to have an efficient process that avoids errors. Current processes could be challenged by the sudden surge in volume as well as the need to shift personnel that may not normally work in the lending department. One way to put less of a burden on personnel and possibly avoid bottlenecking is to automate as many processes as possible, if they aren’t already. Especially in these trying times, customer experience will be critical. An automated system improves the customer experience with managed responses, faster decisioning and ultimately better turnaround times.

Learn from an event like this for the future

Many unfortunate crisis events, like the COVID-19 epidemic, are unpredictable and untimely. The only thing we can do is to be as prepared as possible. There is no doubt that the digitalization of banking has made that preparation easier in terms of access for consumers, but it also creates opportunities for better preparedness on the side of the financial institution. Pay attention to the challenges presented to your technology and your processes by the crisis. Ask if your technology is scalable and able to handle the next government program. Is it easy to integrate with other systems that may be required to serve customers better? Modern technology needs to be flexible, configurable and scalable to handle events like this.

This is a critical time for individuals and businesses. And it’s an equally critical time for the financial institutions they will look to for relief during this crisis. By being prepared and offering a fluid and smooth process for borrowers, lenders can do their part to aid in the relief efforts required by this crisis.

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