In the midst from the much-bungled Paycheck Protection Program (PPP), one group of banking institutions have separated itself: Fintechs.
Fintech — a phrase that comes from “financial technology” — has played a vital role within the years after the 2008 recession by offering smaller businesses alternative lending platforms towards the traditional banking system. Throughout the moment of crisis, many fintechs pivoted quickly to shovel out billions in PPP funds.
Like just about everything else associated with the PPP, fintechs have been not even close to perfect over the past few months. However, these forward-facing firms have still helped fill a gap left by the bigger banks.
Let’s check out how some fintechs leveraged their technology to assist small businesses sort out the PPP.
Fintech Lenders Processed Small-Sized Loans
With the PPP receiving $350 billion in round certainly one of funding after which another $310 billion in round two, there must have been enough funds to go around — especially because Congress just extended the program’s deadline from June 30 to August 8.
However, traditional banks seemed to have favored richer clients — the latest numbers from the SBA indicate the average PPP loan sits at $107,000 — leaving many small enterprises in a lurch.
That’s where fintech has thrived.
Based on data compiled from companies themselves and the SBA, here’s a review of how some non-traditional financial institutions have fared when compared to average loan size $107,000:
- Square Capital, the funding arm of the well-known payments giant, has averaged financing size under $11,000.
- While approving the third-most PPP loans associated with a institution, online lender Kabbage helps primarily small borrowers: Its average loan size to date is $28,100.
- In round certainly one of funding, multi-strategy finance company Ready Capital approved the most PPP applicants by volume as well as the lowest average size one of the top 15 lenders at $72,803 per loan.
- While not is a fintech, Cross River Bank is an FDIC member that underwrites numerous loans routed through fintechs (including some loans through the above-mentioned Kabbage). This bank has averaged financing size of $39,871.
Additionally, The New York Times reported in April that some legacy banks gave special help wealthier clients. Based on a JPMorgan insider, their bank’s service was internally dubbed a “concierge treatment” that enabled clients to avoid online portals while skipping long queues.
With bigger banks privileging richer clients, numerous small businesses across the country have considered fintech.
“Any exogenous shock to the system favors companies that can taking action immediately and take advantage of those things,” the co-founder of payroll firm Rippling, Parker Conrad, told The New York Times in June. “All the reticence about doing things online evaporated in an instant. That’s an engaged that impacts not just fintechs but technology companies more broadly who're trying to automate business processes which are offline.”
Even Fintechs Caused Customers Grief
It hasn’t been all sunshine and roses for fintechs, however.
On our site, has noticed a particular struggle with Kabbage — which, it should also be noted, shut off lines of credit to customers in the past of COVID-19.
“We have requested the PPP loan and they are so unorganized and have asked for the same documents a minimum of 15 times please run far a long way away from this company,” commented one frustrated PPP applicant on our Kabbage review. Someone else who claimed to have requested a PPP loan through Kabbage added: “After a month of sending every document in and sometimes sending them in twice, giving them a call [every day] and being put on a wait time simply to find out they would return my calls rather than did.”
Lendio, which generally likes for its wide-ranging loan marketplace, has also irked potential borrowers — mainly during the first round of PPP funding.
Some voiced their stories on Reddit about how exactly Lendio’s partner banks, Ready Capital and Customers Bank, were slow to process approved loans. One Redditor particularly wrote: “Ready [Capital] has become requesting more docs to be able to deny loans Lendio has already approved. Not to mention after being held hostage for 19 days, PPP money is now gone.”
Countless Businesses Got Funding Through Fintechs
Still, it’s difficult to fully disparage the work these lenders did to help small businesses throughout the economic downturn.
Kabbage, for example, has were able to help a remarkable quantity of businesses despite any flaws using its process. After June, the organization doled out 209,000 SBA-approved PPP loans (second simply to bigwigs Bank of yankee and JP Morgan Chase) worth $5.8 billion as a whole. Kabbage CEO Rob Frohwein had earlier claimed that the company “processed over 40% from the average PPP application amount of the largest three banks in the country.”
The Atlanta-based company also partnered with Uber to create a more streamlined process for that car ride’s independent contractors who have been struggling for work since lockdown started. This partnership was especially unique because it allowed Kabbage to prepopulate loan applications with data shared directly from Uber.
Moving on from Kabbage, Square Capital facilitated over 76,000 small company loans worth $820 million in PPP funding through mid-June. Square Capital especially focused on sole proprietors — its quantity of loans to non-employer businesses doubled those of employer firms.
Meanwhile, Lendio helps over 300 banking institutions process 100,000+ PPP loans worth more than $8 billion. The Utah firm has further pledged additional economic support by promising $200,000 in grant money to underserved small businesses.
Otherwise, Nav, which operates a lending marketplace, built a forgiveness calculator and says it helped “tens of thousands of small company owners” to find the best PPP lender. Direct online lender BlueVine vowed on June 30 to continue receiving PPP applications, even as Congress held the program’s July extension in limbo.
Fintechs that don’t usually offer loans even experienced the act. Divvy and Brex, both corporate card companies, used their tech prowess to assist small businesses in need. In the cloud-based payroll and human resources sphere, Gusto provided tools to help small businesses compile the paperwork essential to get PPP funds.
Still Require more Business Aid?
Because Congress extended the PPP deadline to August 8 on July 1, you still have time for you to apply. has written up a basic help guide to trying to get a PPP loan. The federal government is also operating Economic Injury Disaster Loans for businesses influenced by COVID-19. To understand how to apply, read our help guide to the EIDL application.
If you don’t be eligible for a federal aid and have already exhausted your funds, you will need to look elsewhere for financial support. We advise owners have a look at our list of best PPP/EIDL alternatives.
It’s also important to note that many state, county, and city governments are presently running their very own aid programs. For example, Tampa, Fla. just handed out $1.Two million in grants to local businesses as the state of Louisiana recently passed a $300 million small business relief package.
If one of those routes fails, you could try a different type of business loan. ’s step-by-step article on getting a loan may also be useful in securing cash for the business.
