It’s been just over a week since the President signed the Coronavirus Aid, Relief, and Economic Security, or CARES, Act into law. The portion of the bill that banks and credit unions will play the biggest part in is called the Paycheck Protection Program (PPP).
The PPP appropriates some $349B in 100 percent SBA guaranteed loans to small businesses as long as the funds are used to maintain payroll and for a number of other appropriate uses as outlined by the legislation.
As the go-to partners for distribution of this capital, banks and credit unions are already warning that the roll out of this program—which begins today, April 3—won’t be as smooth as some have led business owners to believe.
The fact of the matter is that this stimulus package represents uncharted territory for banks and credit unions, many who process SBA applications manually to this very day.
Consider this: In a typical year, the SBA will distribute upwards of $30B to small businesses across the country. The number as outlined in this legislation is more than 10 times what the Administration is accustomed to handling.
Now, consider the paper-heavy SBA 7(a) loan which PPP loans are modeled after. Banks and credit unions who are planning on manually processing an influx—indeed a surge—of PPP applications will quickly become overwhelmed by the sheer volume of applicants.
As social distancing and stay-at-home orders persist, businesses are feeling the crush of the economic fallout and will need PPP funds with more urgency as each day passes. Financial institutions aren’t just under the June 30 deadline as set by the CARES Act, they’re also under pressure from their customers to get them this money as soon as possible.
Having processed nearly 10 percent of SBA 7(a) loans on our platform over the last four years, with many closing the same day, banks and credit unions have turned to us for help. Now, our Chief Revenue Officer Chris will be bringing feedback from the hundreds of conversations he’s had with financial institutions since the passing of the CARES Act, to attendees of our upcoming Western Bankers’ Association webinar.
“The CARES Act PPP Loans: Feedback from the Field” is a webinar for WBA members that will take place on Tuesday, April 7 at 2 p.m. PST. Attendees will gain a better understanding of the legislation and the role their institutions play, gain insights from the conversations Dan’s had with bank leaders across the country, and will of course be able to ask questions.
Learn more about this upcoming webinar and register today, here.