The FinTech industry is stepping up to help the federal government get much-needed relief funds to small businesses throughout the country.
SMBs are being hit hard by the COVID-19 pandemic, with a recent PYMNTs survey of over 200 small businesses finding that 26 percent aren’t sure they will survive this difficult time. In fact, SMB total dollar sales are down 26.9 percent since the beginning of March, with 26.1 percent of these businesses currently closed.
Online lenders including Kabbage, Funding Circle and OnDeck, along with additional FinTechs such as Plaid, Stripe and FIS, are now in discussions with the White House, National Economic Council, Treasury Department and Small Business Administration to help get $349 billion of emergency capital to SMBs, as part of the CARES (Coronavirus Aid, Relief, and Economic Security) Act.
“We went to Congress and said, ‘Looking at the magnitude of the situation, any federal or state program that relies on the 2008 playbook of rescuing small businesses by relying solely on banks, credit unions is not going to be enough,’” Ryan Metcalf, Funding Circle’s head of U.S. regulatory affairs and social impact, told Cheddar.
While the Treasury said it plans to issue the funds as early as Friday, April 3rd, traditional banks can take up to four months to approve and fund a loan. FinTechs can slash that time dramatically, with some approving loans in less than 24 hours and sending funds within three days.
“The SBA has a fairly outdated system,” said Sam Taussig, the head of global policy at Kabbage. “They don’t have the capacity today to receive requests for what would be a government-guaranteed loan — they don’t have the capacity to respond to every single depository in the U.S.”
Since FinTechs are not integrated into the SBA’s system, these companies are working with the government to figure out how to onboard themselves without crashing the system.
In addition, technology provider NYMBUS just launched a new technology for banks so that they can process SBA Paycheck Protection Loans faster. And Biz2Credit also rolled out a similar service, with its Biz2X Accelerate SBA targeting banks and credit unions to manage a surge in SBA loan applications and inquiries, enabling lenders to streamline SBA loan processing.