ID 179650855 © Photovs | Dreamstime.com
As a lender, you’re probably feeling a bit overwhelmed right now.
The federal government responded to the escalating COVID-19 crisis with a historic $2 trillion relief package – the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Through CARES, many small businesses can access the Paycheck Protection Program (PPP), a new low-interest loan program administered through the U.S. Small Business Administration (SBA).
Due to the rapid rollout of these emergency relief measures, however, banks and credit unions have been swamped with requests from their business borrowers. Many lenders are finding it difficult to navigate the SBA’s new eligibility criteria and lending requirements. During these hectic and confusing times, financial institutions are struggling to maintain their “normal” commercial lending operations.
Some lenders are using this opportunity to review their internal processes and to outsource certain non-core functions, like environmental and collateral risk management. Here’s why this makes sense, especially now:
As you consider outsourcing your risk management function, it’s important to remember that not all vendors are created equal. Seek out a firm that provides a holistic approach to risk management, versus one that offers a short menu of specific services. With the more comprehensive approach, the vendor serves as your virtual risk management department, providing advice and guidance and procuring products and services from experts in the field on your behalf.
When conducting your vendor due diligence, make sure the firm has a complete understanding of both the risk management and business aspects of making a loan, familiarity with current government regulations, strong relationships with regulatory examiners, and an established network of proven, vetted service providers. Additionally, protect against possible conflicts of interest by ensuring the risk management consulting firm doesn’t also provide Phase I and Phase II Environmental Site Assessments in-house.
As you will likely be swamped with calls from your business borrowers in the coming weeks and months, it’s a great time to consider outsourcing some of your non-borrower facing functions, like your risk management, environmental due diligence, and appraisal processes. This will empower your team to focus on helping your borrowers access the resources they need to stay afloat during this time of crisis. Here at ORMS, we’re ready to help you with everything else.