OakNorth partners with New York-based Modern Bank to help support US businesses through Covid-19
OakNorth is partnering with New York-based Modern Bank to help support US businesses through the Covid-19 pandemic, just days after announcing a similar partnership with another US bank.
The strategic partnership will see OakNorth help Modern Bank with collecting documents and end-to-end processing, as the US bank gears up for an expected influx of hundreds of thousands of businesses applying for the Paycheck Protection Program.
The programme is a lifeline offered to US businesses hit by the economic downturn caused by coronavirus and forms part of the $2.2 trillion (£1.75 trillion) CARES Act passed by Congress to help Americans weather the economic downturn caused by Covid-19.
As part of the tie-up, OakNorth will also provide Modern Bank with extra operational capacity through pre-screening of applicants for loans.
To help offset the financial impact of Covid-19, Modern Bank is providing businesses with less than 500 employees with loans of up to $10m (£7.9m) to help cover payroll costs, interest on mortgages, rent and utilities.
Specifically, OakNorth assembles teams to quickly build a bespoke end-to-end solution, which enables Modern Bank- and other banks with are participating in the Paycheck Protection Program- to take existing borrowers through the programme within hours.
The design of the OakNorth platform means that Modern Bank retains complete control of key decision-making and the risk-management processes, such as eligibility for loans and compliance checks.
Rishi Khosla, co-founder of OakNorth, (pictured) said: “Our Platform was built to help get credit to the businesses that needed it most, faster. Modern Bank wants to support US businesses through this crisis, and we want to play our part in helping them and other banks participating in the Program, do this as quickly as possible.”
“As we’ve seen with similar loan programs around the world, banks are experiencing call centre and web traffic that’s up to 50 times the normal levels and are simply unequipped to deal with this level of volume.”
“The operational efficiency gains our solution provides through process streamlining and automation, as well as pre-screening of applications, will enable lenders such as Modern Bank to effectively manage this increase in demand, which means much needed loans will go out to the small businesses who desperately need them.”
Bippy Siegal, founder of Modern Bank, said: “As a commercial bank built by entrepreneurs, for entrepreneurs, Modern Bank is led by a team that leaped at the chance to be a part of the solution in the midst of the COVID-19 pandemic.”
“The CARES Act’s Paycheck Protection Program gives us the opportunity to serve our existing clients, as well as a much larger universe of commercial clients, who are racing against the clock to get the funds they need to support their valuable businesses.
“Working closely with our partners at OakNorth, we were able to move quickly to put in place the solution in alignment with our institutional mission: to deliver superior products and services that empower our clients to achieve their individual financial goals – for their businesses, for their family, and for themselves.”
In the UK, it was recently announced that OakNorth was one of four new lenders to have been added to the government’s emergency coronavirus lending scheme after criticism that it is failing to help companies reeling from the economic fallout of the pandemic.