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Banks are targeting burgeoning FinTech providers who are shortening the turnaround time for PPP loans. The booming industry could force the banks to keep it for good.
In the first round of the PPP, Premier Valley Bank processed the loans themselves, but for PPP2 they plan to work with a fintech, which speeds up the process for clients.
“The second go-around, we think we’re going to handle most of it internally, but we’re going to team up and help deal with some things,” said Lo Nestman, CEO of Premier Valley Bank.
Jim Ford, CEO of Central Valley Community Bank, have also stated that they will seek to partner for PPP2.
Ford currently has a partnership with a fintech to process the PPP forgiveness, but not for the processing of requests.
“We’re in the final stages of evaluating if that would work for us this time around as well, so that we both do the origin on this portal and forgive the portal altogether,” Ford said.
Ford says a fintech would prevent customers and lenders from emailing or mailing documents back and forth. Instead, clients would upload documents to a portal, which assures clients that their information is uploaded, instead matching multiple lenders in their nine-county territory.
But some community banks are hesitant about fintechs.
“For me and community banks, it’s a bit too much like Wall Street; but it’s always good to know what the competition is doing, ”said Dennis Woods of United Security Bank.
Woods says he’s open to what his employees think is effective. Loan amount is a major determining factor due to the sheer volume of paperwork and documents checked and scanned by third party software companies rather than bank employees.
“Real loan officers have to decide if it saves them time,” Woods said.
FinTechs make money from bank payments per customer request processed. Right now, with mass lending, it’s a good time for fintechs to approach banks to use their services.
“We’ve just been approached by about six fintech companies,” said Woods.
The benefits, said Woods, are that banks don’t have to chase red tape. He described it as “administrative support” because they can collect information for you. But businesses can’t decide if businesses qualify, and some clients need interaction with lenders – and need support throughout the process.
Steve Jones, COO at Suncrest Bank at Visalia, said they were excited to partner with fintechs. He says this allows the bank to focus on the needs of its customers.
“It allows us to carry out our usual activities, of which we have a lot,” Jones said.
In the first drawdown, Suncrest Bank processed the loans manually, without resorting to a fintech company.
When their volume became too large in the first round, they referred clients to a community development financial institution (CDFI) that uses a fintech.
This led to a partnership with SmartBiz Loans, a financial technology company. They have since partnered with them to create a US Small Business Administration 7A loan program.
Numerated, a fintech that Suncrest Bank has partnered with to cancel the loan, will also help with PPP2 requests.
“It’s a huge efficiency, allowing our markets to carry on with their usual activities rather than shutting down and working on PPP,” Jones said.
He also said the process is self-explanatory for customers and requires minimal explanation.
“It’s a fairly straightforward step-by-step process. They compared it to PPP’s TurboTax, so anyone who has made tax software online for their own personal taxes will find that this is just filling in the blanks, and they will ask you a few questions and he will deal, ”he said. .
This may be the era when fintechs are entering the mainstream. At their peak, they processed $ 250 million per hour and $ 20 billion in P3 loans the first time around.
“We’re excited to partner with fintechs and really see how we can help our businesses. It definitely complements what we’re doing now, ”Jones said.
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