How two startups are making big bucks from PPP loan fees

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Also in late February, Blueacorn and Womply faced an unexpected tailwind due to a major rule change from the Small and Medium Business Administration, which oversaw the lending program. The Biden administration fears that women and minority-led businesses are disproportionately left out. Lending method overview We provide loans to individual entrepreneurs (groups of contractors and work groups) based on reported revenue, not profit. Overnight, millions of people are entitled to help. Spurred on by marketing campaigns, they hit two companies.

By early March, “we were overwhelmed with demand,” said Calhoun, a private equity veteran who joined the company later that month to help drive Blueacorn’s growth. “In 24 hours, we went from 15,000 new customer support tickets to 27,000,” he recalls. “These are levels similar to Amazon.”

Blueacorn rented a call center and trained hundreds of temporary workers in troubleshooting. Womply has relocated nearly all of its 200 employees to deal with the loan problem. Both companies were still struggling to catch up. Reddit group Thousands of borrowers have complained about delays, lack of communication and social media bug fixes.

Lewis Grethorne, an Uber driver in Boone, North Carolina, near Bob, signed up on the Womply website on April 7, and two weeks later signed the documents for a $ 7,818 loan. However, the money shown in government reports as approved was not paid by Benworth Capital, one of Womply’s partners. Gratorn’s attempt to seek help from Wompley was unsuccessful.

“You cannot talk to people or actually communicate with them,” he said. A Womply spokesman declined to comment on Glutthorn’s experience.

The rest worked more smoothly. San Francisco-based Uber driver Dan Burke saw an ad for Womply and applied for a loan in mid-April. Seventeen days later, there was a $ 10,477 deposit in his bank account, funded by Fountainhead SBF, another Womply lending partner. On the loan, he said the process was “perfect”.

Millions of small loans from two technology companies, coupled with a congressional decision to make small loans more profitable, resulted in huge payouts to small lenders. Prestamos raised $ 1.3 million in loan last year. The New York Times has calculated creditor fees based on the following data and plans to raise about $ 1.2 billion this year. Government data..

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