How Independent and Community Banks Used Fintech to Tackle PPP

Challenge/Solution: Top community banks saw that old-school loan application processes wouldn’t cut it when small businesses fought for survival during the COVID-19 pandemic. So they took action, using fintech lending platforms to deliver when customers needed it most. Here’s how they did it, in their own words.

The power of fintech is leveling the playing field between community banks and the mega-banks who spend considerable sums on technology. This was all the more evident during the coronavirus pandemic as small businesses struggled to keep their doors open and applied for government-backed funding they so desperately needed. The colossal number of PPP loan applications that community banks received, combined with the confusing submission requirements, was a big part of the reason many banks turned to fintech partners – and it’s a decision they thankfully made.

As Ben Brazell, EVP of Retail Banking at First Reliance Bank says, “In this round, we didn’t just consider implementing a digital solution, we moved right away to implement one!  Our advice to other banks is to make sure the proper resources are assigned to conduct the due diligence, selection and implementation of a solution.”

SBA lending is a convoluted process even without the added complexity of a new loan program, like the Paycheck Protection Program (PPP). Banks all around the country labored to meet small businesses’ frantic demands as the pandemic began to shut down the economy. The story was the same whether you worked at an ICBA-member community bank, or a large multi-national.

The key difference that separated the leading independent and community banks from their peers, and often from the bigger banks as well, was how they leveraged technology to handle this demanding program all while the pandemic was limiting branch access. These banks quickly figured out the traditional way of manually processing applications, or even using an e-sign form, would not suffice with the ever-changing set of program rules. Instead of trying to build a solution quickly or hiring an outside contractor to build custom software, they turned to platform providers like Biz2X — a nimble fintech with deep lending platform expertise.

“The rules around the Paycheck Protection Program in 2021 changed and therefore we all had to adapt to those new PPP qualifying rules,” says Brazell. “The Biz2X solution made that process easy for us and our customers.”

Solutions like these offered a purpose-built platform using the latest cloud architecture and included a critical integration to the SBA E-Tran system. Even better, the platforms could be launched in as little as one week. This provided a simple and centralized way to process loans digitally, auto-calculate and capture the required information, while also equipping relationship managers with a real-time view to support clients through an unprecedented lending program. The result was these banks were able to develop new relationships with small business clients, deepen existing ones, and in the process create hard-won loyalty that will last long into the future.

An independent bank based in Syracuse, NY, Solvay Bank used Biz2X this year to originate PPP loans from its community of small business customers. “Our partnership with Biz2X allowed us to simplify and streamline the PPP application process with an online portal—pivoting from manual paper processing to electronic submissions to the SBA,” explains Paul Mello, CPA, Solvay Bank President and Chief Executive Officer.

PPP loan origination software saved banks all over the country time, money, and effort when it came to PPP loans. But with PPP in the rearview mirror that doesn’t mean everything will go back to business as usual. Using lending technology will no longer be optional for both banks and their clients as they have gotten accustomed to the convenience of a full digital experience.

Paul Mello of Solvay Bank notes that, “As a community-focused bank, we are committed to providing our customers with a suite of digital products and solutions to make their banking experience as efficient as possible.”

Fortunately, lending software such as Biz2X offers a complete end-to-end digital lending platform to handle all SBA guaranteed loan programs. For standard SBA lending there lots of benefits of using a fintech platform. These include a borrower-friendly loan application process that lets applica

nts choose whether to apply in a branch or fill out an application online. Plus, it’s all automated. Once borrowers upload their data online, the system checks for missing or incorrect information. A good platform also connects banks with third-party services to perform key underwriting steps and satisfy SBA documentation requirements such as tax returns, credit scores, identity documents, bank records, and more.

So how will community bankers put their banks in the best position for long-term growth and success after the pandemic? You can bet that for many it will involve their brand-new digital lending platform. Using platforms like Biz2X, independent banks like First Reliance Bank and Solvay Bank will boost lending opportunities and delight customers long after PPP is a distant memory.

Darren Hecht SVP, Business Development Biz2X

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