As businesses hurry to apply for a Paycheck Protection Program loan, online financial companies are playing an important role in helping the smallest of small businesses.
"These businesses have a really hard time getting served because they just, they don't generate enough revenue for most institutions or even technology providers, even accounting platforms, you name it. They tend not to serve that particular customer base because they're small," said Kathryn Petralia, co-founder and president of Kabbage.
"And overnight, it turned into these business owners who need the money the most, didn't have options to turn to. They didn't have lenders that were actually lending," said Brock Blake, co-founder and CEO of Lendio.
Lendio and Kabbage are among more than a dozen internet-based companies that stepped in to help businesses that fell through the cracks at big national banks. Lendio is a marketplace for business loans, and in the first round of PPP funding it says it helped connect 70,000 businesses with lenders. But co-founder and CEO Brock Blake said that process was far from smooth.
"There wasn't a lender in the country that had ever done a PPP loan. The SBA never done a PPP loan. There are all, there are all sorts of hurdles and challenges and technology issues and operational challenges, and it was just so painful on so many levels," said Blake.
Kabbage co-founder and president Kathryn Petralia said the revolving door of rules and requirements made the Small Business Administration's application process especially tricky the first time around. But by the time the second round of funding was available April 27, many of the kinks had been worked out.
"If you talk to somebody who applied on Friday, they would tell you it was unbelievable. That they went in, they uploaded their documents, they finished the process. They got a notification that their loan was submitted all within a couple of hours. So we were really able to improve that process over the last several weeks as we were able to automate the reading of the documents ," said Petralia.
More than half of the $310 billion included in the second round of PPP funding that helps businesses impacted by the coronavirus is already gone. But Petralia and Blake said there's still time for businesses to apply. For people waiting on the application and funding process, they urged borrowers to muster all the patience they can.
"Everybody's, you know, trying to work really fast. And these are systems and agencies that weren't designed to do this work," said Petralia.
"Thirty million businesses are trying to get loans in a matter of days. And that, that's years and years and years of normal business in a matter of days. ... The amount of demand and the anxiety around it is so unprecedented. I'm not sure how anyone could prepare for that," said Blake.