The Paycheck Protection Program is in its third round, though small businesses still face a steep learning curve in figuring out how to access the funds they need to keep operating.
Nonbank fintechs are hoping not only to get funds from the program into the hands of small-business owners, but also to help those merchants overcome the hurdles they encountered earlier in the pandemic.
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It's here where payment firms that aren't necessarily making PPP loans can play a role, in effect using their digital expertise to bring more small shops into the program.
"PPP applications are interesting but also depressing. We have a founder who worked at Morgan Stanley on IPOs who saw the PPP application and thought it was the most complex structure he ever had to navigate," said Victor Ho, CEO of Fivestars, a San Francisco-based firm that develops digital marketing, customer acquisition, back-office support and payment products for small businesses.
"If it's complex for us to figure out, imagine how complicated it is for these businesses," Ho said.
Fivestars, which has a network of about 14,000 merchants, has added partnerships with fintech lenders that support PPP loans, enabling a digital process for gathering documentation for applications. As a result, it can produce qualification decisions for merchants in a few minutes.
There have been some improvements in the past few months, as merchants have become more tech-savvy as a result of the rush to automation during lockdown.
"The innovations around coronavirus, such as the move to digital payments and digitizing businesses, has brought about some improvements in applying for PPP loans," Ho said. "My main complaint about this new round is it came around so slow. We're six months from July. A lot of small businesses have failed since then."
Other firms added technology to improve the application process for PPP.
The SBA's proposed headstart for minority-owned businesses did not adequately address the need in 2020, argues Sharon Carimeli, chief compliance officer at BlueVine, a Redwood City, Calif.-based small-business lender and payments company. Carimeli, who is also president of the board at the Innovative Lending Platform Association. During the first round of PPP, BlueVine provided nearly $4.5 billion in loans to 155,000 small businesses.
“The PPP application process was daunting and confusing, to say the least. I tried several times to apply through my local bank and they had no idea what they were doing, I couldn't get anyone to help me," Lorry Sightler of Upscale Resale, a consignment store in Aiken, S.C., said in an email. The store applied for a PPP loan through Fivestar's link to BlueVine. "The money has helped keep our doors open."
Fintechs were not included as PPP lenders at the start of the program, though when they were added, companies such as
"With fintechs included, any proposed headstarts during a third iteration of PPP under the Biden/Harris administration will prove to be effective, potentially reaching and serving even more small businesses," said Carimeli, adding fintechs are able to process large volumes of applications through their own technology and partnerships. "Allowing fintechs to participate will streamline the process and get money into the hands of the SMBs that need the most aid.”
