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PPP forgiveness challenge reveals an innovation shortfall

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The Paycheck Protection Program (PPP) is a lifeline for millions of small businesses, but the road to economic recovery is rocky. For Main Street America, there is a lot of work ahead and that includes navigating the complex PPP loan forgiveness process.

A recent survey from the National Federation of Independent Business shows that 80% of small business owners applied for a loan through the PPP and 90% of those applications were approved. More than half of PPP loan recipients – 54% – expect to have their loans completely forgiven, while 27% expect three-quarters of their expenses to be forgiven. The earliest PPP loan recipients had to spend their money by May 29. The timing means we have reached a phase where lenders need to manage the complex loan forgiveness process.

The SBA recently released updated guidance and a new application to help small businesses ensure that their PPP loans are forgiven. The guidelines raised more questions, about deadlines and the original lending terms, which Congress is now expected to address and modify. With expectations high and anticipated changes to loan forgiveness criteria on the horizon, how are lenders going to deliver?

As of May 23, more than $511 billion in PPP loans have been approved – an amount nearly 25 times greater than the $20 billion in SBA loans granted in 2019. Manual validation of loan forgiveness standards for millions of PPP loans will come at a tremendous cost for lenders, both in terms of money and potential risks. The only way to handle this flood of forgiveness is to automate the process. Pulling in the required third-party data, including payroll costs, rent, utilities, and mortgage payments, saves hours of time and expenses. It also helps protect lenders from errors and gets rapid relief to small businesses.

Automation and technology allow lenders to handle an evolving situation that changes by the day: adjustments are easily made to terms, timing and required data for loan forgiveness.

Imagine costs and risks for lenders and harm to small businesses if millions of applications were reviewed manually twice or even three times. An automated platform can run the data time and time again, at a fraction of the cost it would take to do it all manually. Technology presents easier, faster and more efficient solutions at a time when small businesses need all the help – and time – they can get.

Small businesses need relief, and banks can’t afford to face fines, audits, or carry low-interest PPP loans on their books. With a quick and efficient automated process, both business and banks win – and these simple victories can help accelerate recovery for the broader economy, too.

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