Non-traditional lenders look to fill PPP gaps
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There is still well more than $100 billion available for Paycheck Protection Program loans, despite initial predictions that the late April refresh would be insufficient.
Glass half full explanation: Most qualifying small businesses that wanted a PPP loan already got one, and the economy is now reopening and recovering.
Glass half empty explanation: Many lenders, including large ones like Wells Fargo, stopped taking PPP applications. This may have been particularly problematic for small businesses that waited for loan forgiveness guidance to be finalized, which happened weeks past deadline.
Kathryn Petralia, co-founder and president of digital lending platform Kabbage, is in the latter camp — particularly when it comes to independent contractors like gig economy workers, who either didn't have existing banking relationships or found the application process to be byzantine.
- "Around 40% of the 140,000 approved PPP loans through Kabbage have been for independent contractors, and their median loan amount is just $13,500," she says. "There aren't many banks that want to manually underwrite $14,000 PPP loans... It's just not worth their time."
What's new: Kabbage today is launching a dedicated PPP application portal for independent contractors.
- Included is a channel for Uber drivers, in partnership with the company, whereby Uber-specific documentation will be automatically uploaded.
- Similar arrangements could be coming soon with other gig economy companies.
The bottom line: The PPP loan application process remains open until June 30. Don't be surprised to see a last-minute surge, as non-traditional lenders like Kabbage seek out those who fell through the early cracks.
Worth noting: Sen. Marco Rubio said Monday that there will have to be at least some disclosure of PPP loan recipients, despite Treasury Department reticence. Per Rubio:
"There will be disclosure, and it's just a question of whether there’s differentiation between $100,000 loan and a $5 million loan... If you have a big loan, you know, there's no avoiding it. We’re going to need to know who you are."
