Last week the government passed a stimulus package called the CARES Act which included $349 billion in loan guarantees for small business. This was a major topic covered in our recent webinar where various fintech companies in the small business lending space shared how they were ready and willing to help small businesses. However, the question remained whether fintechs would be included to help get funds distributed to the many small businesses who are desperately in need of capital.
Over the weekend we received clarity, with Treasury Secretary Steve Mnuchin stating:
“Any FDIC bank, any credit union, any fintech lender will be authorized to make these loans to a small business subject to certain approvals.”
This is great news not just for fintech but for small businesses everywhere. It is only by engaging with fintech lenders, many of whom have end-to-end digital processes, that small businesses will be able to get access to these loans in a timely fashion. Of course, we don’t know what “certain approvals” means but the government knows they have to move quickly.
The small business loan program is expected to be up and running in the coming week so it will be interesting to see just how fast funds will flow through small businesses. The government is saying that funds will start to be received in as little as three weeks from now. But with potentially many millions of loans to get out the door it is going to be a Herculean task to get this money out quickly.
It is great to see the government acknowledging the importance that fintech companies play in our financial system today. While it is certainly too soon to make any predictions this may be a time for fintechs to shine as they demonstrate their ability to move fast to help American businesses.