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Lending & Credit Risk SBA Lending

Digital capabilities adopted for PPP: The ‘new best practices’ for strongest players

Mary Ellen Biery
May 13, 2020
Read Time: 0 min

Key Takeaways

  1. PPP required lenders to embrace digitalization at scale and vendors delivered
  2. The earliest PPP solutions were built upon existing solutions for SBA 7(a)
  3. A focus on the entire life cycle of the PPP loan is important in lender-vendor collaboration

The lightning-fast adoption of digitalization by financial institutions scrambling to get Paycheck Protection Program (PPP) loans into the hands of small business customers could represent a watershed for those that embrace their newfound capabilities

That’s the message of a new report out of Aite Group, a leading independent research and advisory firm that examined the PPP initiative and the technology vendors that rapidly helped lenders roll out the program to millions of borrowers.

“Once PPP is over, there will be two populations among SMB lenders,” said Aite analyst David O’Connell, author of “The PPP Paradigm: How Vendors Help Lenders,” in an interview. “Those that treat the things they did during PPP as a one-time event and as a handful of improvisation activities to help them survive the storm, and the other cohort, which will outperform. Those will be the companies that look to everything that they turned to and obtained, and they’ll look to their experiences during PPP and will seek to embrace, internalize, and propagate them as competitive competencies.”

In other words, some financial institutions will finally have the proof of concept that using technology to transform their usual business-lending processes is the way to go.

‘A distinct competitive advantage’

“Digitalization will be, for those lenders, a distinct competitive advantage,” O’Connell said. Instead of fearing that digitalization is something that will sideline them, those lenders will understand that it enables them to “cease being process-pushers” for clients, he said. It will free them to spend more time on value-added services for clients, such as providing analytics, or making information available to clients about how to better manage capital or how their controllers can avoid getting scammed by phishing. And they will understand that technology removes the manual clutter, allowing lenders to “close more loans and have more relationships,” O’Connell said.

Aite’s report identified the key approaches and attributes of PPP vendors like Abrigo that helped lenders issue PPP loans at a time when adaptability and digitalization were key for lenders and businesses dealing with the impacts of the coronavirus.

SBA loans are notorious for their lengthy turnaround times and manual processes, and community financial institutions with their relationship focus tend to complete financial transactions “in a face-to-face way,” O’Connell said.

“That left the industry positioned poorly when PPP came along,” he said.

Many banks and credit unions were frantically looking for solutions that would help them handle efficiently the volume of PPP applications expected to flood their institutions during the short “open gate” of PPP funding availability at a time stay-at-home orders and social distancing restricted movement by customers and staff.

“PPP required the embrace – within days – of digitalization at scale,” O’Connell said. “Vendors like you folks [Abrigo] just totally delivered.”

“Parties within the U.S. small- and midsize-business (SMB) lending ecosystem acquired new capabilities via their participation in PPP,” the report said. “Most important among these are a lightning-fast embrace of digitalization in a business that had previously been dominated by face-to-face interactions and a tolerance for and resilience to operating under ambiguous and fluid circumstances despite their epic scale and social import. Far from being embraced for one-time use, these capabilities are likely to become new best practices and areas of competency for the strongest players.”

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Not starting from scratch

The launch of the PPP was a whirlwind, with the Coronavirus Aid, Relief, and Economic Security Act (CARES) authorizing the program signed on May 27, and the final guidance of the program issued just hours before the April 3 opening day of borrower applications.

“We’re talking seven, eight days of 18 hour days or longer of developers code binging – with people not seeing their families for days even though they were sheltering at home, and companies offering online resources and training to help them accelerate (financial institutions’) embrace of the digitalization of the PPP storm,” O’Connell noted.

In this all-hands-on-deck development environment, the earliest PPP solutions primarily were built upon existing solutions for SBA 7(a) loans, according to the Aite Group’s findings. For example, Abrigo modified its existing Sageworks SBA Lending solution to handle the Paycheck Protection Program requirements. It modified existing forms, like the SBA Form 1919 borrower application for 7(a) loans to accommodate PPP requirements and created the SBA Form 2483 borrower application, including a loan calculator.

Aite noted that the longer a vendor had been working with the SBA in general and with E-Tran, the SBA’s application portal, in particular, the more value it could deliver by virtue of its deep technological knowledge of the E-Tran system.

“During the first round of PPP funding, which was initiated on April 3, 2020, E-Tran was overwhelmed and shut down on several occasions,” the report said. “It was the vendors with the longest incumbency on the system that were able to provide their lenders with the in-system data needed to troubleshoot loans—on an application-by-application basis.”

By the second round of PPP funding, Abrigo’s market-tested SBA solution had also enabled a new “quick submit” functionality that allowed lenders to submit multiple applications rapidly through E-Tran to accommodate those that had queued up completed applications while waiting for additional funding.

In addition to onboarding and E-Tran, other “table stakes” functionalities of various PPP solutions that Aite discussed in the report included:

  • Online loan applications
  • PPP-specific portals that created a “digital storefront” for outreach, applications, and document exchange
  • URLs customized for each applicant
  • Proactive outreach capabilities to keep customers informed with the status of their application
  • Legal support to anticipate changing legislation and provide guidance to create modifications within the solution
  • Electronic signature for digitized (and social distancing-approved) borrower interactions 

Life cycle focus is important

Aite also noted that a focus on the entire life cycle of the PPP loan was important in the lender-vendor collaboration.

“Widely expected to be rife with documentation challenges, novel processes, and the potential for continued shelter-in- place work conditions, the attestation process is expected to be as ambiguous, fluid, and demanding of agility as the initial loan onboarding processes,” the report noted. “Lenders should bear this in mind and require it be of focus in any lender-vendor PPP-centric relationship.”

Abrigo, the report noted, is actively working on the ability to automate attestations required from a borrower for loan forgiveness and coaching lenders to prepare for it, “hyper-focused though they may be on PPP rounds one and two, with their social mandate, malleability and demand volume,” the Aite report states.  

Focusing on the life cycle of the PPP loan and beyond is important – for both vendors and lenders, O’Connell said. “The best vendors and lenders are collaborating on how to move forward.”

“Once the COVID-19 pandemic is over, it will be the organizations that learn permanently from these programs, rather than episodically, that will complete both low-touch and high-touch tasks at scale as well as outcompete in the SMB lending market,” the Aite report notes.

Contact Aite to read the entire report: “The PPP Paradigm: How Vendors Help Lenders.”

Kylee Wooten, Account Executive, contributed to this article.

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About the Author

Mary Ellen Biery

Senior Strategist & Content Manager
Mary Ellen Biery is Senior Strategist & Content Manager at Abrigo, where she works with advisors and other experts to develop whitepapers, original research, and other resources that help financial institutions drive growth and manage risk. A former equities reporter for Dow Jones Newswires whose work has been published in

Full Bio

About Abrigo

Abrigo enables U.S. financial institutions to support their communities through technology that fights financial crime, grows loans and deposits, and optimizes risk. Abrigo's platform centralizes the institution's data, creates a digital user experience, ensures compliance, and delivers efficiency for scale and profitable growth.

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