As lawmakers debate a new stimulus package, including the possibility of a new tranche of Paycheck Protection Program (PPP) funding, banks that delivered large volumes of PPP loans this year may find themselves better prepared for a third rollout. 

For many of these institutions, including Bank of America, success depended not just on how they reacted to the crisis, but how they were able to build on groundwork they already had in place. For the nation's second-largest bank, this represented a new iteration of its digital and human-supported approach to business banking. 

"Our work that we've done over the past five years, and the investments that we've made for digital capabilities, have really helped set us apart from the rest because we were able to quickly get up and running," Sharon Miller, Bank of America's head of small business, told Banking Dive. "We're digital first but we still have that human element, the combination of high tech and high touch."

With $51.3 billion in total outstanding small-business loans, Bank of America was the top small-business lender in the U.S. in the second quarter of 2020, the bank said in a press release. The bank also provided the highest number of approved PPP loans — more than 343,000 — and the second-highest dollar amount, $25.6 billion, according to Small Business Administration (SBA) data.

The bank attributes its PPP success to two enablers: repurposing thousands of staff members and leveraging a digital and human support infrastructure it had built before the pandemic. The bank spends $3 billion annually on technology initiatives, according to a recent shareholder presentation.

"In 45 days, we processed 18 years' worth of loans, so it was a very big undertaking," Miller said of the bank's 10,000-strong PPP support team. "All of our teammates came together, whether you were in mortgage, in Merrill Lynch, or small-business [teams] — all of us were supporting small-business clients.

"Our work that we've done over the past five years, and the investments that we've made for digital capabilities really helped us," she said.

'Digital plus human'

Bank of America's personal approach with small-business customers, combined with a digital platform it's been shaping in recent years, helped support delivery throughout PPP, the bank said. It also fueled increased digital adoption among Bank of America clients. About 51% of the bank's small-business customers deposit checks through a mobile device, the bank said. 

"That didn't just happen through COVID, but this has been a journey since 2015, and it's about educating our clients about more efficient ways to deposit transactions," Miller said. "Zelle transactions are through the roof, [and] we've seen a huge increase in money movements electronically."

This year, 28% of Bank of America small-business clients sent a payment using Zelle, the bank said in an email. Clients have sent 20.7 million payments, valued at $12.8 billion, since the launch of Zelle for Business in 2019, the bank said.

Additionally, to help business owners manage their cash flow needs, the bank last year launched Business Advantage 360, a business banking product suite that includes Cash Flow Monitor, a digital financial dashboard available through desktop and mobile interfaces that offers real-time cash flow updates and projections. The bank began allowing clients to integrate data from third-party business applications into Business Advantage 360 through a feature called Connected Apps in February.

Bank of America's client-focused approach, supported by its digital infrastructure, allowed it to focus on pain points for businesses that experienced challenges this year.

"We have 40% of all the dental practices in the United States, and when the American Dental Association mandates that [dental practices] close, you can't have revenue," Miller said. "We have been there before the [coronavirus] crisis, we were there throughout offering deferment of their loans, and we're helping them as they're reopening."

Bank of America's client orientation supported by strong digital capabilities puts it in a good position to stay competitive in the small-business market after the pandemic, said Christine Barry, a research director at Aite Group.

"Banks prior to the pandemic that had been making the right technology investments, have the flexible infrastructure in place and had strong relationships with clients fared much better than those that, for whatever reason, had been delaying a lot of their investments in digital transformation," she said.

Lessons from the pandemic

One area where Miller said PPP pushed Bank of America to improve is underwriting.

"With PPP, and the investments that we've made in those underwriting capabilities, we're going to be able to use a lot of that as we move forward in supporting our clients and being more efficient in decisioning and lending," she said.

Michael Crumpler, a managing principal at Capco, said Bank of America's small-business tool set can be considered a gold standard for the industry.

But like all large banks that processed a high volume of PPP loans, new complexities around the forgiveness process need to be addressed, he said.

"It's not just for Bank of America, but for every bank — they've got a whole new set of problems that they're going to have to deal with that they've never seen before [with the forgiveness process]," he said. "They're going to have the equivalent of a loan-level review to make sure that they've got the proof that the Federal Reserve or the [Office of the Comptroller of the Currency] is going to require."

If a new stimulus package includes a round of PPP loans, estimated at up to $300 billion, large banks, including Bank of America, may want to reconsider their approach, said David O'Connell, a senior analyst with Aite Group's wholesale banking team. 

"The first time around, [banks] were too selective and opportunistic in deciding which companies they'd assist with access to PPP," he said. "I've spoken with dozens of small lenders who took clients away from large banks under these circumstances."

As the economic recovery takes shape, Miller said the bank is monitoring economic conditions closely to account for a range of scenarios, and that it plans to continue to work with small-business clients on challenges and opportunities as they evolve.

"We were here, going through the crisis, offering deferrals, helping clients with PPP to bridge the gap as they come out of that," she said. "The focus now is on how we help business owners to continue to think about their model, be nimble, and be able to pivot when necessary because any crisis is going to bring opportunity, and we want to be there to have this discussion and be a partner."