Innovation expedites pandemic relief

When the U.S. government in March 2020 announced its Paycheck Protection Program (PPP) to help small businesses with loans to continue paying employee wages and lease rents, it was not fully prepared to deal with the system choking up. Technology came to the rescue, where service providers tapped API-based systems and the like to smoothen the process of routing the relief loans to genuine borrowers. The $349-billion PPP initiative, which later enlarged to $670 billion, was part of the $2.2 trillion CARES Act that aimed to help businesses tide over the economic downturn in the wake of the pandemic lockdowns. The plan was for banks to disburse the loans through the Small Business Administration (SBA). Many banks had taken the traditional route of creating the standard workflows they had used for loan disbursal programs. But those systems were not geared for disbursing the massive amounts in loans in a short period, which was critical to keep afloat especially small businesses. As it happened, the influx of loan applications overwhelmed the banking system’s infrastructure. It was not as easy as hooking up to a web screen, querying for a particular loan, submitting all the customer details, and securing sanction for the loan. Furthermore, banks and the SBA faced obstacles in accurately ascertaining the creditworthiness of loan applicants, identifying and weeding out fraudulent applications, and eventually onboarding borrowers.