Lendio Starts Funding Engines, PPP is On The Way

President Trump officially signed the economic relief package Sunday night. While the House, President, and Senate can’t agree on the checks individual Americans will get from Uncle Sam, $284 billion for PPP is on the way.

In preparation, Lendio, an online loan marketplace that facilitated $8 billion in PPP funds over the summer, has already opened the application floodgates. But when is the bill landing?

“The SBA has ten days from the time it was signed into law, January sixth, when they have to give guidance,” Lendio CEO Brock Blake said. “Then, they have some time after that they’ll open it up, my guess is that it will likely go live somewhere between the 10th to 15th.”

Firms, start your funding engines; the money is coming in about two weeks. And Blake said that with the demand for capital this high—the funds would go quick.

“My guess is that it will be two to three weeks, maybe a little longer,” Blake said. “One of the reasons it will last a little bit longer is because they reduced the loan maximum size from ten million to two million. As a result, two to three weeks or more like, you know, three or four.”

Lawmakers initiated limits to the high end this time around to halt concerns that “small business” bailout money was going to larger sized firms. That isn’t the only change for what some say could be the final round of government stimulus.

“I like what they’ve done this time around, addressing some of the key issues, first of which allowing borrowers to have a second turn on PPP loans,” Blake said. “This pandemic has lasted longer than anyone expected, and there’s a lot of restrictions on these business owners.”

The first time around, the Fed handed out forgivable funds based on two and a half months of payroll, and that went real quick, Blake said. For a firm to meet the criteria for a second loan, they have to prove they have a 25% reduction in revenue from 2019 to 2020.

Blake said he was excited that the new aid is granting industries especially hard hit, like restaurants and hotels, to get larger loans “three and a half time instead of two and a half times.” Blake’s favorite part of the new program is incentivizing lenders to serve genuine smaller businesses, where last time they were not.

“Last time, so many of the smallest small businesses were at a disadvantage because we all know lenders prioritize the largest loan sizes first,” Blake said. “They left the smallest of small business out.”

Lendio and fintech lenders focused on this underserved market of small businesses last time, Blake said. After advocating on behalf of small borrowers, Blake said there are incentives for lenders to give to the underserved and actually make money.

“Thankfully, in this new PPP program, they created a new incentive package for loans smaller than $50,000,” Blake said. “That makes these smaller loans a priority, instead of put toward the back of the list.”

Kevin Travers was a Reporter at deBanked.