Charles Potts: Lending during COVID-19

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By Charles Potts, ICBA

The Paycheck Protection Program (PPP)presented challenges for community banks, but they overcame them with innovative lending solutions that highlight the need for more effective automation and a consistent user experience.

Before the digital era, community bankers and technology providers cobbled together disparate solutions to originate loans. The lending process included identifying and qualifying customers, positioning and promoting the right products and services, and managing the underwriting and onboarding processes. These stages often involved different solution providers.

Now, in 2020, we see new opportunities for community banks that are considering upgrading or expanding their lending capabilities. Technology now makes possible integrated applications that can reduce the number of solution providers.

As community banks rethink the future of lending and lending technology after COVID-19, the lessons they learned from the PPP loan experience can inform the development of products and processes. Specifically, community banks should:

  • Examine the processes, practices and solutions deployed to get PPP loans into the hands of small businesses for payroll. Evaluate what worked and what didn’t. During the crisis, one community banker I spoke with accelerated the PPP loan process by putting some new tools and resources into both the hands of the borrowers and their lenders, allowing them to connect more efficiently and directly. They are now considering ways to take this model and apply it to other products and services.
  • Explore loan digitization. Timeframes imposed by the CARES Act meant community banks had to quickly create a digital application data collection process for borrowers. Although these banks did not have a digital loan application process in place, when circumstances required digitization, they quickly implemented an innovative solution.
  • Research and analyze potential partnerships using ICBA’s network of community bank-focused solution providers, including our Preferred Service Providers (PSPs), Corporate Associate Members, and ThinkTECH Network and ThinkTECH Accelerator technology companies. These providers have been vetted to ensure they offer unique value to community banks. During the crisis, these companies jumped in to support community banks with the PPP loan process, helping them secure, for example, necessary documentation and signatures electronically.

After COVID-19, community banks have an opportunity to reimagine their lending practices. New technology partners can not only bring operational improvements and efficiencies, but also reduce costs and time in managing the loan process. This affords the borrower a more seamless experience and a better relationship with their community bank.

Community banks will see increased demand for loans from consumers and small businesses as they look to rebound financially from the economic crisis that accompanied the pandemic. Community banks now have the responsibility to find the most effective processes, products and partnerships to best serve their communities.

Charles Potts ( is ICBA senior vice president and chief innovation officer