Finch provides access to the largest payroll and HR management systems to allow financial service providers to access payroll data seamlessly. Codat provides access to multiple sources of financial data for SMBs, primarily accounting software. Both allow lenders and other financial service providers to securely access this data on their SMB customers.
Finch and Codat are partnering to empower financial institutions to supply the funds SMBs need to weather economic challenges, starting with PPP loans.
What is the Paycheck Protection Programme? What lessons were learned from last time around?
The Paycheck Protection Programme represented an unprecedented action by Congress to help SMBs that experienced major business disruption in the wake of the global pandemic. Over 5.2 million loans were approved by 5,460 lenders totaling $525B as of August 2020.
In January 2021, the second wave of PPP loans was made available totalling $284B in order to provide additional emergency financial support to SMBs.
A range of problems were experienced during the first round of PPP loans. Lack of clarity on the forms that needed to be completed, large corporates being provided with loans whilst the small businesses were left hanging; and a complete lack of understanding into how forgiveness worked.
This time around businesses and lenders are better equipped to receive and offer funding through the programme, but it’s still not an easy process…
So what is the process?
The number of steps and the depth of information required from various systems to facilitate a successful PPP loan can be overwhelming.
SMBs have to fulfil a range of eligibility requirements. They must dig up key business data, calculate estimated loan amounts using average payroll costs, and then go through a separate process to apply for forgiveness that includes cost summaries for qualified expenses.
Lenders have to conduct good-faith reviews for loan amounts, disburse funds quickly, and confirm the qualified expenses by asking for proof.
The solution — a partnership that streamlines PPP application intake and decisioning, all via a single API
While submitting an application , businesses are required to provide:
- Proof they have suffered a decrease in revenue
- A detailed breakdown of the business’s expenses along with the receipts attached to those expenses
- Granular employee specific information as well as aggregate wage amount
This can take small business owners hours, if not days to produce manually.
Many of these data points can be made accessible through Finch and Codat’s platforms to help SMBs and lenders make the most out of this programme, seamlessly & securely allowing these businesses to share their payroll and accounting data with lenders.
Using Finch, lenders can retrieve key payroll information directly from the business’s payroll system for specified periods, employee-level data to calculate the maximum loan eligibility, and auto-populate key business data required in the PPP loan application.
Lenders can use Codat to obtain access to accounting data, including existing debt & expenses as well as revenue, to build a comprehensive view of the SMB’s financial situation. Codat also allows lenders to extract key evidence to support the expense claims i.e. receipts.
Once the capital is disbursed, lenders servicing the loans can utilise the same ongoing connections to confirm how the funds were spent, using Finch to confirm payroll spend and Codat to verify other qualified business expenses. All without businesses having to re-authorise the connection to their financial software.
Using both platforms lenders can cut down application time and reduce errors that could arise from manual calculations.
Finch and Codat combined can help lenders make a faster impact on SMBs with access to PPP loans.
For more information on how Finch and Codat can help you please reach out to the Finch team at [email protected] or Codat directly at [email protected]