Preparing for Another Round of PPP Loans

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Lawmakers have overcome months of gridlock to approve a follow-up economic package that would provide relief for citizens devastated by the economic fallout caused by COVID-19. Although well short of the historic $2 trillion CARES Act funding from Spring, the latest coronavirus relief bill is welcome news tens of millions of Americans desperate for financial support. Included in the new $900 billion package is $284 billion ear-marked another round of the Paycheck Protection Program (PPP), the loan program that helps small businesses borrowers pay their workers’ wages and stay operational. Loans granted to eligible businesses could be used to cover payroll, rent, utility and other operational expenses to stay afloat amidst forced closures and extended restrictions. The first round of the program proved to be vital for small businesses, as indicated by how quickly SBA funds dried up.

With another round on the way, it’s important to remember what happened the first time the program rolled out.

Borrowers applied for forgivable loans primarily through federally insured banks and credit unions as well as through SBA-approved private lenders. As the entities responsible for processing applications, lenders faced intense pressure to review loan eligibility as quickly as possible. It was reported that lending departments in banks and credit unions were quickly overwhelmed by the sheer volume of applicants, leading to a substantial backlog of applications. In the early stages of the program, some 80% of small business owners mentioned that they were still waiting on their application eligibility, often left in the dark about their application status. A portion of the slow pacing could be attributed to a variety of reasons related to applicants’ documentation required to be submitted to lenders: incomplete forms, bad scans, and manual input into systems.

To recap, here’s a sample of documents to expect from prospective borrowers:

  1. PPP Application Form
  2. Payroll processor records
  3. Payroll tax filings
  4. Form 1099-MISC
  5. SBA Form 3508 Loan Forgiveness Application
  6. Income and expenses from sole proprietorship
  7. Any bank records that demonstrate qualifying payroll amount

As you prepare for an influx of new borrowers, consider doing the following with incoming applications and qualifying documents.

Apply OCR to Your Scanned Documents   

In the early stages of the PPP loan program, applicants were scrambling around rummaging for the right documents to scan and send over to their lender as quickly as possible. For lenders, the static nature of scanned files made it difficult to input an applicant’s information into their loan processing systems. Loan processors had the onerous task of manually inputting data, substantially extending overall processing times. You can ensure your next application will be swiftly reviewed and approved by applying Optical Character Recognition (OCR) to your documents, so that your key financial information becomes machine-extractable text. Doing so enables loan departments to copy and paste or use automated extraction tools to quickly capture relevant data onto internal systems. Additionally, applying OCR to documents renders information as searchable text, allowing lenders to quickly refer to your application’s key information using simple keyword searches rather than manually scrolling through pages.

Use Digital Forms

About 20-30% of general applications (not just PPP) for financial services arrive with wrong or missing information. As if understanding application rules isn’t overwhelming enough, this is an alarming error rate that will bring processing to a crawl, considering the loss of time from the back-and-forth for information clarification that ensues. The high error rate is partly attributed to missing information or legibility issues brought out from filling forms with a pen. As a small business owner eager to get your loan approved, you can mitigate this by filling the form digitally. Converting static forms to fully fillable documents gives applicants the convenience of filling them out on their computers, rather than printing and filling out with a pen and paper, which is unpredictable in terms of legibility and accuracy. By applying logic-based rules to forms, you can further prevent applicant information being filled in the wrong fields (for instance, applying words in a field that required numbers). Adding rules can also ensure that each empty field is filled in as required. Optimizing a form for digital filling and logic-based rules maximizes the probability that submitted applications are fully legible, accurate and in good order, reducing back-and-forth communication between loan applicants.

Use eSignatures

Applying handwritten signatures to complete transactions is one of the oldest practices in business. But with social distance protocols, remote office, and general uncertainty about the future, providing “wet” signatures in person seems like a relic of the past. Sure, returning a scanned version of an applicant’s handwritten signature is perfectly eligible and technically considered digital, but this practice involves the time-consuming process of downloading, printing, signing, scanning, and emailing/uploading, which is cumbersome at best. Lending departments pressured to sort through high volumes of PPP loan applications can ill-afford to wait for this to complete. Electronic signatures, or eSignatures for short, can dramatically reduce the steps needed to gain consent from applicants, from days to mere minutes. The process simply requires applicants to apply an auto-generated electronic signature of their name directly onto the digital consent document. Once done, the document automatically gets sent back to the lender, instantly completing the transaction.

The most important thing for financial centers to know about eSignatures is that the technology has been deemed legally defensible in the US since 2000, provided that certain provisions are met. By implementing eSignature technology in the workflow, you’ll be able to reduce bottlenecks at the consent stage, ultimately leading to more loans processed. (Learn more about the legality of eSignatures here)

Foxit is Prepping Lenders for a New Round

In anticipation for a new round of PPP loans, now is the time for lending departments to arm themselves with the right tools to maximize efficiency. Foxit’s PhantomPDF is an all-in-one solution that enhances incoming and outgoing documents for speed, automation, and intelligent processing for lenders. It features an OCR engine that can apply text recognition to multiple applicant documents at once so that information can be quickly transferred to other systems for further processing. Its one-click Form Field Recognition automatically detects static fields within forms and converts them into fully fillable ones, which can be further customized with rules that prevent incorrect input. Finally, Foxit has a deep integration with DocuSign, the leading eSignature platform, minimizing the time and effort typically required to solicit applicant consent via signatures.

With the next round of PPP loans on the way, and the financial incentives associated with loan approvals, lenders have a chance to elevate their profiles as trusted financial providers which supported their community through these unprecedented times. Foxit is here to help financial centers get there. You can find out more about Foxit solutions in financial services here.

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