Dive Brief:

• Data aggregator Plaid is devising a product that would allow small businesses to share payroll data with their bank in an effort to shorten the Paycheck Protection Program (PPP) application process.
• Sen. Marco Rubio, R-FL, one architect of the PPP, tweeted Saturday that "multiple fintechs, including PayPal and other online lenders, are ready, able and willing to process” PPP loans, but "they need Treasury to release [the] application for nonbank lenders." Rubio added that he expected that paperwork to roll out early this week.
• The Small Business Administration (SBA) said it had processed about $38 billion of PPP loans as of Monday morning, according to the Financial Times. That means that as the program entered its fourth day, more than 10% of the $350 billion in funding to help small businesses recover during the coronavirus crisis is spoken for — without the inclusion of fintechs.

Dive Insight:

PPP loans will be forgiven if small businesses keep their workforce largely intact. Applicants must download their payroll data and share it with their bank, which must verify the information — a process that Plaid said is often done manually and can take days. The company wants to shorten that to a matter of minutes.

"Speeding up loan processing could mean the difference between a business and its employees surviving intact, or going bankrupt and adding to the skyrocketing unemployment," Plaid CEO Zach Perret told CNBC. "We are working to enable the quick and secure sharing of payroll data so critical data can be verified instantly so funds are distributed as quickly as possible."

Plaid said at least 100 lenders, including banks and fintechs, are interested in its payroll data-sharing product. The company said it is in talks with payroll firms such as ADP and Gusto.

"People need solutions that will make the road to recovery as straightforward as possible," Perret said. "Fintech can and should be able to help."

Tech executives and analysts in the space both say fintechs are uniquely positioned to help banks and companies of all sizes weather the effects of the coronavirus crisis.

"The trend for partnerships, I think, is going to grow, because banks typically move a lot slower than tech companies, and they’re also not up to speed on the entrepreneurial startup world," Jody Perla, managing director of global banking and payments infrastructure at Payoneer, told Banking Dive. The company streamlines cross-border payments, merchant services, tax solutions, risk management and working capital for businesses.

Alex Kern, a fintech analyst at CB Insights, said the biggest problem is half of small and medium-size businesses (SMBs) have a cash buffer of less than 30 days.

"SMBs need loans, invoice financing, lines of credit. These are all activities that fintech companies have done a really good job of providing to SMBs because they’re good at doing it quickly, underwriting risk efficiently," he told Banking Dive. "They’re able to handle the big spike in applications while the larger banks are still figuring out how to do all of this remotely and may not be as used to it."

Kern said he thinks fintechs will increasingly reach out to big banks to partner and provide these financial services.

"I would say COVID-19 is almost more of an acceleration of this trend where banks are partnering with fintechs to reach out to SMBs in ways they couldn't before," he said. "Depending on the strategy of the particular fintech, they might want an acquisition and may reach out to a bank that their software might be particularly well suited for."

Big banks left out, too

Fintechs aren't the only ones feeling left out. Even the biggest U.S. banks struggled to bring the program online in the hours between Thursday night, when the SBA released 31 pages of guidance on the program, and Friday morning, when government officials targeted the loan application window to open.

Citi and Capital One had yet to launch their online portals by Monday evening, Financial Times reported. JPMorgan Chase opened its portal Friday afternoon but suspended it from mid-morning Monday until almost 5 p.m. Eastern time. Wells Fargo launched its portal Saturday but, by Sunday, estimated it had reached the $10 billion threshold that would keep the bank within an asset cap imposed by the Federal Reserve in 2018.

Among systemically important U.S. banks, only Bank of America opened its portal by 9 a.m. Friday.

Nonetheless, by Saturday, government officials were touting the program’s success.

"It’s been flawless so far," President Donald Trump told reporters Saturday at the White House. "Far beyond our expectations. I don’t even hear of any glitch."

David Steen, an executive vice president at Bridge Community Bank in Iowa, told Bloomberg the launch was fraught with confusion.

"You had the Treasury secretary tweeting out how well it was going, but what I was seeing was that most banks couldn’t get on the system," he said.

Even when the online portal worked, it had "a tremendous number of fields" and it was not clear which were required, Bruce Elder, chief executive of JD Bancshares in Louisiana, told the Financial Times. Elder said the community bank had "hundreds" of people "lined up with applications ready to go," but the bank had submitted only two.

"When you hit the submit button, you hope you will get approval, not an error message," Elder said.

And time, as Perret and Kern said, is of the essence for many small businesses.

Sens. Elizabeth Warren and Ed Markey, both D-MA, emphasized as much in a letter Monday to Treasury Secretary Steven Mnuchin and Small Business Administrator Jovita Carranza.

"The ability of small businesses to access this money in a matter of days could determine whether or not they will need to shut their doors to their employees and customers forever," the senators wrote. "Take whatever steps are necessary to fix the existing operational and technological problems with the system, provide additional guidance to banks that clarifies the questions they still have, and act quickly to stand up this program so it works in the way that Congress intended."