Small businesses and financial institutions have been profoundly impacted by COVID-19 concurrently with being at the center of the SBA Paycheck Protection Program where funds were distributed on a first-come, first-served basis. Credit unions, where local connections continue to be part of their DNA, suddenly found themselves in a race to deliver PPP funds.

How did creedit unions adapt and what solutions did they use? We sat down with Ian Lampl, CEO of LoanStreet and Roy Mansch, Vice President of Retail Operations at Credit Union of America to hear their insights.

Please tell us about your organizations.

Ian: I co-founded LoanStreet in 2013 after having served as Deputy Chief Counsel for the Troubled Asset Relief Program (TARP) because of the need I witnessed for better lending technology among credit unions and community banks. Since then approximately 850 financial institutions and about 13% of all credit unions have registered with LoanStreet, where the technology solution we are best known for is our loan participation platform. More recently, we launched a PPP lending platform, which is the first use-case for our comprehensive commercial lending solution.

Roy: Credit Union of America (CUA) is a $1 billion credit union headquartered in Wichita, Kansas. CUA serves a community-based field of membership, with special interest and expertise in serving educators and healthcare workers. A full-service financial cooperative providing both consumer and small business services, CUA added small business lending in 2008 and serves over 2,000 business members with business loans totaling $30 million.

When the PPP was being legislated, what was your assessment?

Ian: We were pleased to see that all credit unions and banks would have the authority to originate PPP loans, but we also knew that non-SBA-familiar institutions wouldn’t have the capacity to do so at scale without new software. That is why we sprinted to get our PPP platform launched by April 1.

The fortuitous reason we could stand-up a PPP platform quickly was because we were also rolling out a comprehensive commercial lending solution. We took part in this solution and stood-up a PPP platform around it. While many functions were similar, we did need to build-out a web-based borrower application and portal as well as integrate with the SBA’s E-Tran via API protocols. Our E-Tran API integration went live in late April and that’s when most of our PPP loan volume was processed.

Roy: Our community has been significantly impacted by COVID-19 and we believed it was important to deliver business owners the benefits of the PPP. Our CEO, Frank Shoffner, created our purpose statement of “We come to work every day inspired to make a difference in our members’ lives.” We were able to embody this purpose by funding loans for an average balance of approximately $16,400. We ranged from a maximum amount funded of $247,000 to a minimum of $393. In the past few weeks, we’ve brought in new software, which usually takes months, navigated SBA requirements, and digitized many of our small business lending processes in an all-remote environment.

How strong was the uptake for the PPP solution? What’s your pricing model?

Ian: We have 40 clients on the platform, many of whom were active with us prior to April though some were new. As of mid-June over 1,600 applications, representing approximately $45 million of loan volume, were approved via our platform. That’s an average size of $28k, which is substantially lower than the overall PPP’s $110k, with the driver being that our clients have refrained from making very large loans.

For pricing, we wanted to align with both large and small clients’ use of the solution and thus decided to charge a percentage of the SBA origination fees lenders receive.

What alternatives did you consider?

Roy: There were a few vendors and an internal option we considered. LoanStreet became the vendor we chose, because of their solution and ability to help through the entire process, including navigating fluid PPP regulatory issues.

What will be the PPP’s legacy?

Roy: We made a difference in the lives of our members. We were able to help several members that were directed to us as referrals and help them in their time of need. This pandemic has accelerated the industry’s thinking about a more digital experience. It has allowed us to see where we can become more efficient and how we can do business remotely or digitally.

Ian: We are incredibly proud to have helped our clients deliver the PPP. We believe the PPP will catalyze fundamental change in the way commercial and business banking works among credit unions and community banks. We expect faster progress towards delivering a modern, digital business lending experience – there will be no going back to the manual processes that ruled the industry.