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Written by Cyndie Martini
on April 14, 2020

As part of the federal government's coronavirus stimulus program, loans are being made available to small businesses with less than 500 employees as part of the CARES Act. Eligible businesses include sole proprietors, independent contractors, and self-employed persons. The loan program is called the SBA Paycheck Protection Program (PPP). The loans will be administered by the SBA and distributed through banks and credit unions. Lenders started processing loan applications on April 3, 2020. The program will be available through June 30, 2020.

PPP applicants apply directly through a bank or credit union's website. Because of the heavy volume of applicants to the PPP program, many financial institutions will find that they do not have the backend infrastructure to successfully process these loans. A lot of lenders rely on in-person loan processing, which means those lenders will not be able to handle the influx of PPP applications. The end result is that many financial institutions will have to direct borrowers to other lenders.

To help financial institutions cope with the volume applicants, fintechs have stepped in, providing much-needed loan processing infrastructure at scale. Fintechs are able to integrate with the SBA's backend system for loan approvals. The user-facing part of the loan application, provided by a fintech, will reside on the financial institution's website.

Some of the fintechs involved include Fiserv, LoanStreet Inc., and  Jack Henry & Associates. While not technically a fintech,  Jack Henry & Associates is no stranger to the commercial lending space. It is expanding its  Jack Henry Lending division to support PPP loans.

“LoanStreet’s specialized SBA PPP platform provides all the necessary tools to enable financial institutions to immediately originate and service SBA PPP loans at scale regardless of their prior experience with the SBA or existing technology capabilities,” Ian Lampl, CEO of LoanStreet, said to CreditUnionTimes.

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