Will Online Lenders Be Approved to Make PPP Loans?
Lend Academy, the publishing arm of LenditFintech, ran the headline yesterday that said “Fintechs Authorized to Make Small Business Loans as Part of Government Stimulus.” The statement seems to stem from a quote by Treasury Secretary Steve Mnuchin in which he said that “Any FDIC bank, any credit union, any fintech lender will be authorized to make these loans to a small business subject to certain approvals.”
That proclamation is not quite definitive, but online lenders like Kabbage are optimistic that such an arrangement will come to fruition. Kabbage CEO Rob Frohwein said on LinkedIn that he believes his company will be approved to make Payroll Protection Program (PPP) loans on behalf of the SBA, though he further explained that they are also partnering with banks so that they’ll be able to help small businesses in this regard either way.
Time is running out as retailers begin furloughing or laying off employees that the stimulus was designed to keep.
“The PPP is designed to provide a direct incentive for small businesses to keep their workers on payroll by providing each small business a loan up to $10 million for payroll and certain other expenses,” the SBA’s website says. “If all employees are kept on payroll for eight weeks, SBA will forgive the portion of the loans used for payroll, rent, mortgage interest, or utilities. Up to 100 percent of the loan is forgivable.”
As the clock ticks and workers around the country lose their jobs, the pressure on the federal government to approve some limited number of online lenders to assist in the process potentially increases.
Nearly two dozen fintech companies are collectively lobbying to particpate in that effort including Kabbage, OnDeck, and Lendio.Last modified: April 29, 2020
Sean Murray is the President and Chief Editor of deBanked and the founder of the Broker Fair Conference. Connect with me on LinkedIn or follow me on twitter. You can view all future deBanked events here.