Radius Bank is standing up a Paycheck Protection Program loan forgiveness tool, even as many banks feel left in the dark by the Small Business Administration, which hasn’t yet released details on how the  process will work. The Boston-based bank is creating its own solution in advance of the PPP forgiveness process that will start in a couple of months.  

“We’re an online bank, so we’re very accustomed to seamless tech solutions,” said Grant Skeens, head of government guaranteed lending at the bank. “The SBA just sets out the rules. The banks need to figure out how much will be forgiven.”  

Radius, a one-branch bank with a nationwide digital footprint and $1.4 billion in assets, has created a tool that will analyze the spending of each small business to determine how much of the loan will be forgiven under SBA rules. It’s a proactive, digital approach to a problem that has other banks advising clients to use manual methods like Excel and the back of checkbooks. 

According to Skeens, the bank’s solution will be an online application that prompts clients to answer questions regarding how they spent the loans. Clients upload documents showing what they spent on payroll, utilities, rent and other costs. The SBA website says 75% of the forgiven loans must go to payroll. The bank will analyze how much clients spent on payroll compared to their average payroll costs to determine how much of the loan will be forgiven. Skeens said lenders have 60 days to determine how much of the loan can be forgiven, and Radius plans to have the application available to small businesses in about eight weeks. 

Skeens said Radius is using technology from the digital onboarding vendor Treasury Prime to help create the forgiveness solution. Treasury Prime’s banking APIs help automate back-office processes like know-your-customer compliance and audit trails. 

In addition to its business and retail banking products, Radius provides the back-end banking services for fintechs like NorthOne and the Brex Cash account. LendingClub announced in February it was acquiring Radius for $185 million in a move for the fintech to gain a banking license. At the time of the announcement, LendingClub and Radius estimated it would take about 12 to 15 months for the deal to gain regulatory approval.  

See also: Confusion muddles PPP loan forgiveness processes

Radius Bank isn’t the only institution rolling out PPP loan forgiveness tools. Ernst & Young used Microsoft Azure to develop its own PPP forgiveness platform. According to an EY statement, the platform provides borrowers a “digital user experience allowing for monitoring of their loan forgiveness status and self-service submission of documentation during the coverage period in order to efficiently manage their portfolio of loans.” EY didn’t disclose any banks using the platform. 

With SBA guidelines around the PPP changing regularly, it’s still unclear exactly how the forgiveness process will work. Plus, with potentially high fraud rates around the government relief program, PPP forgiveness solutions might not completely insulate banks. 

“These loans are allegedly guaranteed, but there’s no paper evidence of that,” said Pam Perdue, chief regulatory officer at the compliance technology company Continuity, during a Bank Innovation webinar today. “If the financial institution accepted some fraudulent information, they’re going to be left holding the bag in those instances of those [loans] they thought were guaranteed.”