Delivering PPP Loans to Main Street Small Businesses

April 29, 2020
David Chubak, Head of U.S. Retail Banking

In the first phase of the Small Business Administration's Paycheck Protection Program, we delivered more than $1 billion to small businesses around the country. It is an effort that has taken thousands of colleagues, from every area of the business, working around the clock to design, build, test, launch, scale and serve to participate in one of the largest federal lending programs in history.

As a smaller small business lender, our service model has been built on individual relationships, pairing our clients with dedicated support from a tight knit team of experts. We are smaller than peers in the space (#151 on the SBA's list of Regular 7(a) lenders in 2019) because we have fewer than 700 branches nationwide and small businesses are typically served through branches. Yet as the COVID-19 pandemic drove small businesses across the country to close their doors almost overnight, we wanted to do our part. That meant dramatically scaling up our capabilities to ensure we were ready to support a government-led response.

To handle the volume and serve customers remotely as they sheltered in place, we set out to launch an entirely new digital portal in less than 3 weeks – a process that would normally take several months. At every turn, we held true to two core fundamental values:

  1. We were going to help as many small business clients as possible.
  2. We were going to be systemically responsible, adhering to the risk and regulatory guidelines that govern our lending programs to ensure the safety and soundness of the financial system.

We called it Project 72, because we had 72 hours to design the roadmap, 72 hours to choose the platform, 72 hours to do the process mapping and 72 hours to secure legal and compliance reviews. We engaged a fintech provider to build an application portal, automated a digital process to submit applications to SBA faster, dramatically expanded what was a very small team of underwriters and asked hundreds of colleagues across the bank to join the effort. For example, Branch Managers have been entering PPP applications into the SBA website and reaching out to clients to obtain missing application documents and electronic signatures and correct email and mobile phone numbers, all remotely.

The process was not without its challenges. The portal needed additional work to be ready to launch to ensure a seamless experience for customers. In many cases, owners of smaller businesses were dealing with the complexity of borrowing for the first time, especially when there were multiple owners beyond a controlling partner. We worked with every client to manage through that complexity, but it did take extra time in a situation where time was not on our side. Similarly, the SBA's ETRAN system experienced issues. A system that typically processes $30 billion of loans per year was being tasked with processing ten times the volume in a matter of days.

There's no question the past few weeks have been an experience to learn from. In the first phase of PPP, we made three times more small business loans than we had in all of 2019.

It certainly hasn't been easy, and it hasn't always been smooth. But I am incredibly proud that we were able to help thousands of businesses and their employees, including:

  • Dinah's Chicken in Glendale, California, owner-operated by Linda and Dave Pearson and their family since it opened in 1967. They have been Citi clients since 1984.
  • Skills for Chicagoland's Future, a non-profit public-private partnership dedicated to addressing unemployment – a mission more critical now than ever.
  • Osprey Seafood Market, a staple of the Napa, California restaurant scene since 1977.
  • Comprehensive SpineCare, a medical practice that since 1996 has provided Orthopaedic spine surgery for New Jersey's Bergen County and the greater New York City area.

These companies collectively employ 89 people. And there are many others – neighborhood markets, nonprofits, restaurants, construction companies, churches and community groups, among others. More than 75% of the loans we processed through the first round of funding were for less than $150,000, and nearly one-third of all loans were for less than $25,000. The median loan size was $50,000 while the average employee base for those we provided loans to is 18. These are the Main Street small business that make up the lifeblood of our communities and our economy.

With Congress having approved an additional $310 billion allocation for the program, the second phase of PPP lending is now underway. This week, we are routing more than 17,000 applications through the Small Business Administration, and are working to get these businesses the resources they desperately need. And we will continue to help as many as we can, whether through government-led stimulus, or working with each client individually to take advantage of the measures we have already put in place to support them through to better days ahead.

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