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Small business emergency lending program expands fintechs portfolios

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The paycheck protection program is a weekend to its second round of hopefully funding small businesses through the corona virus outbreak. Some financial tech companies also known as Syntax got permission from Congress to offer those loans. They include pay pal into it cabbage and others. The hope is that they can get loans to people and businesses who haven't worked with traditional banks in the past and the Fintech say they're tack is also an advantage but so is that true. Let's dig into it and quality assurance the segment where we take a second look at Big Tech Story Felix. Salmon is chief financial correspondent for the tech site axios. The banks were a bit slow to be able to set up websites that customers found it impossible to get to a to a human being or to find out where they stood whether their applications were going through and there was a general feeling that given that all of this was being done on the Internet the Internet companies might be better doing it than the banks were so relatively quickly. This program was opened up so that the eligible lenders included not only banks but also Internet companies Lake Pay Pal and quicken and square. Gotcha I mean. I feel like one of the questions about these lenders. And FINTECH companies and neo banks in particular is that in some ways they serve. Replace this idea of the Community Bank. Like do we have any evidence that they are or could be more inclusive than established lenders. I think they are in the if you applied for P. P. Loan from pay pal. Then your chances of guessing it. We're probably the same no matter who you were given that many of the people applying if not most of the businesses applying had no particular relationship with these Fintech to begin with now doesn't mean they're going to get that loans. It's far from clear that the ability of pay pal to get loans through the SBA system and get people. Funded is any greater than any other bank. But at least you can feel that you're on a level playing field if that's any. Solis which you probably isn't to be honest. Who is applying through? Let's say pay pal or square or into it. Who are these small businesses to a first Brooks mission? Everyone who didn't get a loan or wasn't able to get through when applying through that bank. Whatever the reason was if you haven't got your money it's not give up on your bank entirely but you say well. Maybe I can't get a loan through my bank. I should try a getting along with someone else and given the it's not difficult to apply through pay pal. Oh quicken intuit it. You May as well try if they come back to you and say hey you've been funded. Brin and you can take the money and if they don't it's no harm no foul and is there any evidence or will there ever be a way to tell you think whether they claim that these kind of like tech driven platforms are more nimble and better able to get your application through than a big bank the banks and the Fintech have all been extremely unhelpful? When people like you and me have been asking them for details about how many people try to apply. How many of those people who try to apply actually got their money those ratios on not public information than the information that the SBA has see you need to get that information directly from each one. And I don't think any of them are going to be releasing that data on the kind of apples to apples basis that we'll be able to make that determination. Is this an opportunity for these companies like if they are able to establish themselves as this type of lender or just do good by some small businesses is an opportunity for them to build a customer base down the road I think for about twenty four rows an opportunity to get some goodwill? I think the small business owners actually went to those places putting their applications and then didn't receive any money that some of that goodwill did evaporate. What's more of these companies? Aunt actually lenders at heart companies like paypal and square a much more based on payments on loans. And so. It's not clear that even if this did give them a foot in the door when it came to small business lending that something that they would really want to be right and it feels like certainly some of them have provided loans like cabbage are into it but the others haven't to think they're likely to discover that in fact. This is a terrible morass that they would like to back out of slowly. Small business loans were horrible thing to be in in general because small businesses so many things can go wrong is so difficult to really get under the hood and find out how credit worthy they are for. P. It's different because it's all guaranteed by the government so you don't need to spend too much time really underwriting the loan and understanding the business before extending the credit but if you want to actually lend money to small businesses as part of your business especially if you're doing unsecured and you're not you don't have access to cash flows which you can just S- ts to pay back the loan. Then yeah it's really Nali business where lots of lenders have become unstuck. And it's not clear that very many investors want these companies to get into that line of

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