Supporting small businesses beyond the Paycheck Protection Program with BlueVine’s Eyal Lifshitz

The following was produced by Tearsheet Studios. We worked with small business lender BlueVine to produce a four part series on creating financial solutions serving historically underserved small businesses. It's Small Business Week, and BlueVine wanted to highlight how it's helping small businesses, particularly around the Paycheck Protection Program.

Today, we're happy to have two guests with us: First, Eyal Lifshitz, CEO of BlueVine. Eyal is a third-generation small business entrepreneur who co-founded BlueVine to build a better financial future for small businesses.

Eyal is joined by one of his customers, Joy M. England, MPA from Advocates in Action.

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The following excerpts were edited for clarity.

Eyal Lifshitz, BlueVine: Hi, Zack. And hi, everyone. I'm happy to be here to talk about the topic of supporting small businesses beyond the Paycheck Protection Program, also known as PPP. It's Small Business Week, and what a better time to discuss the impact of PPP with a small business owner.

I have the pleasure of introducing you to Joy M. England, MPA, from Advocates in Action.

Joy is a BlueVine customer who got a PPP loan from us back in 2020. She also uses our checking account.

She's joining us to share more about her story and what type of support she would like to see from the public and the private sectors in the upcoming years.

Welcome, Joy. Can you tell us about your business story? Why did you start your business? How did the pandemic impact you? What was the greatest challenge from the past year?

Joy England, Advocates in Action: I started Advocates in Action in 2016.

I noticed there was a gap in the way that services were being rendered to the population that I had spent my career serving, which is adults with disabilities.

We had a pretty challenging few years in our world. And when those shifts were happening, I noticed that advocacy was taking a backseat. So I was really pulled to making sure that I didn't let that happen as much as I could.

I created Advocates to stand in the gap and to provide services that would empower families and encourage our clients to continue to chase their dreams, to not stop when everybody else told them that they should, even when we have big situations like changes in funding and different access to services. That’s the cliff-note version of how Advocates got started.

It's amazing to think that we have come this far in just four and a half years. But here we are.

I think the next question was how the pandemic impacted us. The long and short of that is that we were able to pivot to a virtual service delivery system pretty well.

But we work with a very vulnerable population of individuals. And they were hit very hard, both health-wise and otherwise, including being removed from their community and their families. That factor was especially challenging for folks that live in supported housing environments.

So it was really tough to go from the engaging relationships that we had, and being able to see our clients and be in their presence to having to do everything virtually.

It was hard to explain that to a lot of our clients. There was a lot of panic and confusion on top of the already panicked and confused state that we were all operating in.

We were blessed that we were able to not take a huge economic impact initially. We were able to really pivot pretty well in terms of staffing and billing services.

As the pandemic began, it was really much more of the client service side that was impacted by Covid, and still really continues to be.

And I think the last part of that first question was about our greatest challenge this past year.

And the biggest challenge was moving into that remote virtual space. Human interaction and connection are a huge part of what we do in Advocates. So shifting to fully virtual while ensuring we were still connecting meaningfully was a challenge.

It still presents a bit of a challenge, but we were able to overcome some of those things with innovation and technology. And my team is really great at making sure that we're still advocating and standing in the gap for our folks that are trusting us to support them.

Eyal: That's great and I applaud you for going through this very difficult time and weathering the storm.

Now, Joy -- describe your experience applying for the Paycheck Protection Program. What emotions were you feeling at the time? Did you encounter any challenges during the process? What was it like?

Joy: We applied a little late in the game, compared to some of the other folks. We applied late in the summer of 2020. And I'm going to be really honest and transparent, because that's all that I know how to be.

I was very intimidated by the process -- or my perception of what the process would be.

I remember thinking other people should apply for this -- maybe we're not impacted enough. And I think that just comes from our service standpoint. We're so used to being the helper, sometimes it's hard to accept help.

So I would say in terms of the emotions I was feeling – it was really just a little bit of confusion, and probably some fear, I think just not knowing what to expect, what the program really, what was going to be expected, did we really qualify, making sure that we were the right candidates and all of that.

But I researched and found BlueVine. And the process was really seamless and supportive. So that made it really easy for a small business owner like me, who gets a little intimidated by the financial side of things at times, especially when there are so many unknowns.

Once I connected with BlueVine, it was really seamless -- the interaction was professional and empathetic, and always from a standpoint of, ‘ask us the questions, we've got you, and there's no need to panic here.’ That really made all the difference for me.

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Eyal, you've continued to grow with products and services. You continue to service small businesses. In a world where the SBA steps up with more financing, making it easier to work with them, what would it be like to operate an SMB in that environment?

Eyal: I think the more SBA financing there is that is easily accessible, the better it is for small businesses.

When we think about what services and products we want to get into, we're always listening to our customers and finding out where we can be helpful to them, how we can integrate in terms of our service offerings, and things that would make their lives easier.

So if SBA comes out, and makes the availability of these new, or even existing services more applicable for fintechs like us, we will certainly look to integrate them with our offering and make them easily accessible and friendly -- same as we've done with PPP. So it very much aligns with our future vision.

So would I like to have more integration of government services in our product suite? The answer is yes, as long as they're friendly, and ones that small businesses want. If they’re services that do not align, or are difficult, or they don't really measure up to the needs of the business owners, then we wouldn't do that.

Eyal, I’d like to switch gears. Studies have shown that fintechs played an outside role in helping people like Joy get access to funding. And I know we reported a lot about that, both here on the podcast, and on our website. But from your experience, and based on some of the information Joy shared about her story, what makes fintechs better suited to support businesses through processes like these?

Eyal: That's a great question, Zack. I think one important data point for the listeners to realize is that small businesses face up to an 80% chance of rejection when applying for a traditional bank loan. And that was even before the pandemic.

PPP, as an example, was one of the first times that the SBA programs actually allowed fintechs to easily participate.

Businesses benefited from a digital approach, which allowed for faster loan approvals, and more inclusive access to capital. That's what fintechs know how to do. And fintechs demonstrated how agility and speed can better serve small businesses. During the rollout of PPP, fintechs played an outside role in genuinely helping the smallest and most vulnerable businesses.

BlueVine, for example, provided over eight and a half billion dollars to almost 300,000 small business owners.

Breaking that down even further, in 2021 alone, we have provided over $4 billion in PPP loans to over 200,000 small businesses. And to demonstrate that no small business is too small for us, our average loan across both programs was roughly $24,000 - 25,000.

We've been able to help save over 600,000 jobs during this program, and we feel really fortunate to be able to contribute in the way that we have. A big part of that is that we have always been structured and suitable for serving hundreds and thousands of small businesses online. And I feel very proud to have been able to step up as part of this program.

Getting back to Joy: PPP is one program, and it’s soon to be over. Are there any other solutions or programs that you'd like to see these agencies growing in the upcoming years?

Joy: Sure. I think prior to the pandemic and my experience with BlueVine and the PPP program, I steered away from structured federal funding.

I think there’s this real thing, at least that I experienced, that was basically #fedfear. I just stayed away from that.

Being a grant writer for so many years, I just felt it wasn’t an avenue I wanted to go down. So once I was a small business owner, I definitely found myself steering away, and really looking more locally.

But then PPP and BlueVine truly helped me to see that there was no reason to fear this, and that there are programs out there that are designed to help.

I think for future programs or solutions, one big thing is that there should be an easier process for startup funding, especially in the specialized direct service field that we’re in.

Grant and contract funding is wonderful, but it's highly competitive. And it's very much a catch-22, because you have to present yourself as the most eligible person to render this service, and rightfully so. But at the same time, if you don't have a ton of experience because you're a newer business, then you don't present as well as some of your competitors. So it makes some of that funding really, really hard to get a hand on if you don't have that experience footprint.

I think that the Biden administration and the SBA leveling the playing field is another solution to help us get our hands in the game.

I think that looking at tax codes, and the disparity in the same tax to a small service company like myself, and a large financial institution, just sets us up for a harder fight than is probably necessary. For the small but mighty of us, it makes it almost impossible to get our hands on the funding that is really needed, especially in the beginning.

I think just implementing those things would be so impactful to small business, and really help grow our communities and strengthen employment rates.

I could talk about that for a long time. But that's what I think, in regards to newer programming.

I’m also curious to know, having talked with Joy here on the podcast, how do stories like hers hit you, how do they land on you, how do they resonate with you?

Eyal: It brings them to life. Today we serve tens of thousands of small businesses, and we've served hundreds of thousands before that.

We're always thinking about what we can do more for them, how we can create products that make their life simpler and easier from the financial side. But having these conversations also brings their story to life. Behind every one of our customers, there is a story -- a whole world.  These are entrepreneurs too. And hearing from them about what they do day-to-day, the challenges that they run into, how they've been weathering the storm through the pandemic, is important for me to connect, and to really understand what's going on with them. So for me, that is really important, not just at the high level as we're building this for the category of small business, but actually getting to know our customers and what they go through.

Eyal, for existing funding options outside of PPP, like 7(a) loans, how do you think the SBA could better simplify and streamline applications? And corollary to that, should it bolster its digital approach and invite more fintech partners like BlueVine to the table?

Eyal: The answer is yes. So first, any business owner who’s applied for an SBA loan outside of PPP knows there's just a mountain of paperwork involved.

Applying for these loans is incredibly challenging. And qualifying has been proven difficult for many businesses.

To truly serve the businesses that loans like these were created for, the administration should revise them, simplify them, and make them more easily accessible. And in addition to that, it should go beyond a one-size-fits-all approach.

As PPP proved, certain industries, such as restaurants, need individual support, and more specialized programs can really benefit the entire economy. My suggestion for the SBA is to update programs’ respective rules -- including a simplified application, clear criteria for qualifying, and certainly an expedited approval process. These moves, together with a push to digitize -- because, if anything, the pandemic has shown that it is a lot more convenient to access financial services online -- will further democratize the loan process, helping small businesses access the capital they need to get started.

And I think fintechs being part of it, and getting the support that they need, will further bolster the programs and make them more friendly to small businesses.

Back to Joy -- knowing all these challenges, did you find any creative ways to support other small businesses over the past year?

Joy: Absolutely. We are advocates and supporters at our core -- we're called Advocates in Action for a reason. We always try to support our community. We believe in the model that everyone can win. We try not to set ourselves up as competition for other small businesses. We're all trying to gain together, as opposed to opposing each other.

So we always try to shop locally for our business needs, for example. We also hire locally whenever possible to help address the employment crisis that is plaguing our community.

Finally, we try to really encourage the inclusion of adults with a variety of abilities in all the things that we do. That means bringing them into our creative space, and bringing them into any open positions that we have

That’s our way of really embracing our community. And the byproduct of that is encouraging the participation in the small businesses around us.

Our main office is right in the middle of a small business district. So we are right in the heart of small business. And it's amazing to watch that revitalization and everyone band together during this time. It’s just unprecedented for us.

So we really just try to always give back to the community whenever we can. We give our staff paid volunteer days to help within their own communities. We have staff in multiple states now. So they're able to give back to their local communities as well. So we really try to make that a part of our culture, day in and day out.

Eyal, it often feels like small businesses make headlines during presidential elections or a disaster like the Covid-19 pandemic. But when you look at the data, they make up almost half of the country's economic output and generate two thirds of net new jobs in 2019. How can we make sure that we're continuously supporting and prioritizing the small business community?

Eyal: You're exactly right. And just referring again to the pandemic -- about one out of six small businesses have closed since the start of it, and those who remain open are facing severe dips in revenue, so it is more important than ever before to support small businesses.

And as business owners emerge from the pandemic, they need a trusted banking partner more than ever. For us at BlueVine -- I envision us offering more innovative and impactful products to help small businesses and then better reaching the smallest of them that need help the most.

In terms of the broader community at large, I would suggest and encourage continuing to support your local SMBs any way that you can. I'm a big fan of buying locally.

Eyal, the Small Business Administration, SBA, historically receives less funding than other agencies. I think when we pulled the data in 2019, the agency's budget was like $1.2 billion, while the US Fish and Wildlife Service, for example, receives one and a half billion dollars annually on average, and the largest federal agencies receive hundreds of billions each year. So if we devoted more funding to the SBA, what kinds of long-term solutions or programs would you like to see the agency grow in coming years?

Eyal: I think with more funding, the SBA can do more. Moving forward. I see the SBA getting an opportunity to implement new funding programs and other solutions to help small businesses thrive, rather than just survive. We're now coming out of the pandemic, and I would like to see us think about the next chapter, not just not just the disaster scenario. Fintechs as a category should be allowed to participate in more federal aid and loan programs. I think that would be very effective. We’ve seen fintechs contribute to PPP during the pandemic, and there's no reason they should stop now.

And then the last thing that I would say is that businesses would benefit from a digital process. The transition to digital, as part of everything that was going on, is the big positive in my mind. That was the one shining light among all the negatives during the crisis.

So digital should also play a part here, for the purpose of faster loan approvals and more inclusive access to capital.

Eyal, what gets you out of bed every morning?

Eyal: That’s a good question. I'm really passionate about what we do in the company. Any founder of a startup knows that startups are hard. you're trying to build something from nothing, and everyday is a new firefight.

You're building for the long term, but every day is a new day in the trenches. It is impossible to do this for a longer period of time -- and I've been doing this for almost eight years now -- without having real passion for the cause.

I think the fact that we are there for small businesses and fellow entrepreneurs to support their success is something that certainly fires me up and gives me motivation to get out of bed every morning. I couldn’t do that without real passion for the cause.

Okay, now, Joy -- my last question is what remains your biggest obstacle to your business growth and success in the next year? And how can we help level the playing field a bit more?

Joy: I think for us, what remains the biggest obstacle really, is just awareness.

So being invited to an opportunity like this really helps a small company like mine bring awareness to my community locally -- not only that we're here and we're thriving and we're here to help, but also our mission.

We like to call ourselves social change agents, because we are advocates for employment for all and employment inclusion. So I think one of the biggest challenges that we continue to face -- and it's been even more pronounced now that the world has been so virtual -- is the inclusion of employment for all. Adults with disabilities are an important part of our workforce, and they have suffered tremendously during the pandemic. We want to be their voice to help fight the exclusion from the workforce they’ve been facing. So that awareness is definitely a huge obstacle for us.

And then there’s leveling the playing field. You are really already doing that through the services that you provide at BlueVine. You’re looking out for the small enterprises, and you're sharing our vision and standing with us through support and attainable financial programs. I can't think of much more you could do.

I see you as an advocate for us. And we need that. We need someone with a little bit of a bigger voice to stand up for us. And that's certainly what our mission is at Advocates.

It's a privilege to link up with a company that values the small business enterprise and really has our best interests at heart, and makes things so clear and comfortable.

I really think you guys are doing a great job. And I would just say keep doing it.

Eyal: Awesome. I really appreciate that. And thank you for saying that. It gives us more motivation to keep pushing forward from our side.