It was a wild ride, but the stream of federal Paycheck Protection Program (PPP) money has finally run out. However, the reach of the loan process is ongoing, opening doors for fintechs while also offering banks an opportunity to explore fintech partnerships and test-drive new automations.

The PPP, enacted as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act, allocated loans to businesses between April 2020 and March 31, 2021.

The PPP provided the $176 billion KeyBank with an opportunity to build bots that the bank will continue to use for loan origination processes — bots it might not have otherwise been able to justify, said Michael Reynolds, the business technology senior manager responsible for robotic process automation (RPA) and artificial intelligence (AI) at KeyBank.

The Cleveland, Ohio-based bank built and deployed nine bots specifically for automating the PPP process. Before the PPP rollout, deploying bots for the small business administration (SBA) loans was not feasible, Reynolds told Bank Automation News. The regular pre-pandemic SBA loan volume was 100 to 200 loans per month, a number not sustainable from a bot perspective due to the $5,000 licensing cost for software. However, PPP changed that and KeyBank began to deploy bots in order to service customers, Reynolds said.

“It was literally like a land rush of everybody trying to get the [PPP] money before it disappeared and ran out,” Reynolds recalled of the first funding round. “At peak, we were submitting 1,200 applications an hour. It typically takes a user 25 minutes to submit.”

The bank created a series of nine bots to facilitate the loan submissions. The bank has retained four of those bots to help automate loans beyond the PPP process.

A testing ground

PPP not only opened doors for Toronto-based startup Boss Insights, an API provider, but also for other fintechs and the banks themselves, said Chief Executive Keren Moynihan. Banks found success during the process, she said, if they approached it in two ways: first, as a chance to better serve business customers, and second, as a means for testing new technology for use beyond PPP.

“The SBA gave such a gift to lenders,” Moynihan told BAN. “It gave lenders every opportunity to go and test. Whoever did not test new technologies, she missed an opportunity.”

It was also, in some ways, confusing for banks, because it was like “fintech Tinder,” Moynihan joked, referring to the online dating app. Every technology vendor claimed to be the best, and banks had to decide quickly because the timeline was tight, with employees working around the clock to process loans. Her advice to small banks was to avoid saying, “I want to digitalize,” and instead ask which vendor could help the bank achieve its loan-processing goals.

Boss Insights offers an online portal for PPP applications, automated pre-qualifications and real-time monitoring of the account and loan. For the startup, PPP led to a partnership with global software company Oracle to launch a PPP platform that addresses loan forgiveness. The company’s fundraising amounts are undisclosed, according to Crunchbase.

Quick decisioning

PPP gave lending platform Lendio an opportunity to contract and connect with “hundreds of different lenders” including fintech lenders, who didn’t have the technology to facilitate these loans, said Brian Hosie, vice president of engineering at the Lehi, Utah-based fintech. The company, which focuses on customer acquisition and loan origination to connect customers with lenders, received $108.5 million in investor funding across seven rounds, according to Crunchbase. The company facilitated 213,000 PPP loan approvals, totaling $9.8 billion.

“We had to pivot really in a matter of days and, in a week and a half, kind of retooled our entire business from stem to stern to be able to facilitate PPP loans,” Hosie said. “Really, all of the lenders and players … in that space are retooling at the same time.”

Hosie said PPP helped increase Lendio’s customer base, creating relationships with community and regional banks the fintech traditionally had not had.

Other SBA loan origination platforms saw the results of retooling quickly for PPP. Before Covid, the platform for the fintech Spark mostly focused on SBA 7(a) loans, according to CEO Nick Elders. Like Lendio, Spark pivoted to facilitate the loans, and actually came to market with a solution on the first day of funding, Elders said. The company originated about 57,000 loans, for an aggregate value of $9 billion, he added.

Before Covid and PPP, banks would take as long as three to six months to make a decision about partnering with the fintech. But during PPP, banks began to commit quickly, in one case in less than 48 hours, Elders said. The process has changed how banks see their own ability to leverage fintech solutions, he added.

“I think they can see, ‘Oh, this, this is an opportunity. We can do this,’” Elders said. “I think that they learned a lot of lessons.”

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