‘PPP may end up being the straw that breaks the camel’s back’: Small businesses increasingly turn to smaller banks and fintechs during the pandemic
- SMBs are finding larger banks busy servicing larger clients rather than their applications for government aid.
- Smaller banks and fintechs are attracting new customers with technology and a stronger orientation toward service.
When the U.S. government approved a $350 billion aid package in April to help small businesses weather the coronavirus pandemic, Happy State Bank in Texas immediately rolled out a digital application for the special loans. The platform, designed and executed by Lightico, allows business-owners to complete the entire application process online, eliminating the need for face-to-face interaction or leaving home.
Happy State is just one of many regional banks and fintechs that are stepping up — and teaming up — to help small-and-medium businesses apply for the government assistance, known as the Paycheck Protection Program, which lends money to businesses to enable them to keep their employees on payroll during the pandemic. These smaller banks and fintechs see this as a chance to prove themselves, and show how they can serve small businesses more effectively than bigger banks, said Ron Shevlin, director of research at Cornerstone Advisors. A recent Barrons report found that 89% of the Paycheck Protection Program loans have come through U.S. banks that are not among the top 25, as measured by asset-worth.
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