Also in late February, Blueacorn and Womply faced an unexpected tailwind from a major rule change made by the Small Business Administration, which oversaw the loan program. Concerned that women and minority-led businesses are disproportionately marginalized, the Biden administration revised loan formula provide individual entrepreneurs – a group of contractors and giant workers – with loans based on their reported income, not profits. Overnight, millions of people need help. Passionate about marketing campaigns, they rushed to both companies.
By early March, “we were overwhelmed with demand,” said Mr. Calhoun of Blueacorn, a private equity veteran who joined the company later that month to help drive growth. “We had a 24-hour period when we went from 15,000 new customer service tickets to 27,000,” he recalls. “These are levels similar to Amazon.”
Blueacorn rented call centers and trained hundreds of temporary workers in troubleshooting. Womply has transferred almost all of its 200 employees to loan origination jobs. Both companies were still trying to keep up. On the Reddit groups and on social media sites, thousands of borrowers have complained of delays, poor communication, and troubleshooting issues.
Louis Glutthorne, an Uber driver from Boone, North Carolina, called Bob, applied on the Womply website on April 7 and signed the paperwork two weeks later for a $ 7,818 loan. But the money – which is listed as approved in government reports – was not paid by Benworth Capital, one of Womply’s partners. Attempts by Mr. Glutthorn to contact Wompley for help were unsuccessful.
“You can never talk to a person or make contact,” he said. A Womply spokesman declined to comment on Mr Glutthorn’s experience.
Others had a smoother ride. Dan Burke, an Uber driver from San Francisco, 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 partner lender. For this loan, he said, the process “went flawlessly.”
The money is pouring in
Millions of tiny loans from two tech companies, coupled with a congressional decision to make small loans more profitable, resulted in giant payouts for small lenders. Prestamos made $ 1.3 million in lending last year. It will raise nearly $ 1.2 billion this year, according to New York Times calculations of creditor fees based on government data…