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  • FinTech Lending, Customer Service, and PPP Loan Forgiveness

    Jun 3, 2021

    IBA, as the premier business brokerage firm in the Pacific Northwest, is firmly established as a respected professional service firm in the legal, accounting, banking, mergers & acquisitions, real estate, and financial planning communities.  Periodically, we will post guest blogs from professionals with knowledge to share for the good of owners of privately held companies & family owned businesses. The following blog article has been provided by Vishal Punj of IBA. Mr. Punj is a successful entrepreneur, MBA degreed professional who combines his corporate, academic, and personal business experience to provide quality representation with superior customer service to his business sale clients.

    FinTech Lending, Customer Service, and PPP Loan Forgiveness

    A couple weeks ago I was having a discussion with a former colleague of mine, now in a senior leadership role at a prominent tech firm in Silicon Valley.  We were reminiscing about our career trajectories over the past twenty years when he exclaimed, “Vishal, tech is great, but fintech is where the action is.  That’s where I’ll be focusing my attention”.

    Many small business owners would agree.  It’s estimated that fintech processed approximately $20 billion in Paycheck Protection Program loans, commonly known as PPP loans, the first time around.  With those numbers on the board one could argue that fintech has officially entered the mainstream.  The onset of the pandemic last year and the PPP legislation that followed played into a narrative that fintech proponents have long advocated.  By leveraging technology and streamlining the process of getting capital a small business can bypass the bureaucracy and strict underwriting guidelines the entrepreneur would otherwise face.  It’s a compelling proposition.  Undercapitalization is the number one contributor to small business failure and a reason often cited by owners as an obstacle to growth.

    I hadn’t given fintech too much thought until recently when I learned that a client of mine had utilized a very well known fintech firm to obtain a PPP loan. After taking his business to market and finding and negotiating with a qualified buyer, both my client and buyer were focused on closing the deal and moving on to the next phase of their lives.  Since the majority of the deals
    I do involve some sort of SBA financing, insuring that all conditions are met for the deal to fund is often what keeps business intermediaries like me up at night.   In this case, a condition of the financing was forgiveness of the PPP loan prior to the deal closing, and/or acknowledgement from the PPP lender that the forgiveness was in process.   I figured it would not be an issue, as most banks have a small business loan department that caters to the needs of entrepreneurs such as my client.  I was shocked when my client informed me that he did not have a contact at the fintech firm, there was just a 1-800 number.  Calling the 1-800 number did not yield any results either.  Fortunately I had a relationship with the SBA liaison for the State of Washington whom I was able to contact and with her help eventually reach the right person.  Still, what should have taken no less than an hour of my and my client’s time ended up taking close to six weeks to finally get a definitive strategy on how to get the PPP loan forgiven.  One thing was clear – the fintech firm simply did not have the systems and processes in place on the back end to service their customers.  Things continued to move at a snail’s pace, with all parties chewing their fingernails until the fintech firm got us what we needed at the 11th hour and allowed the SBA lender used by the buyer for the acquisition to fund the deal and close on schedule.

    It’s fair to say that the pandemic and subsequent financial relief including programs like PPP tested the resources of all financial institutions, Main Street and fintech alike.  During the height of PPP, a SBA banker from a well known financial institution here in the Pacific Northwest commented to me “Vishal, we’re learning and trying to keep up like everyone else”.   As they and other banks learned, the banks that had an infrastructure in place were able to quickly and easily disseminate that information to the appropriate staff, thereby insuring that their clients didn’t get left out in the cold.  As my client and I learned the hard way, having a slick algorithm and AI technology doesn’t mean much if you’re not able to engage with your customers and solve their problems as they arise.  At the end of the day lending and business brokerage are still people businesses.

    This article isn’t meant to highlight the shortcomings of fintech platforms.  On the contrary – without them the PPP legislation would not have enjoyed the success it had as a life preserver offered to the small business community.  Clearly fintech has helped fill a void.  A recent article by Reuters stated that black owned businesses turned to fintech firms at more than twice the rate of those owned by white, Hispanic or Asian people when applying for pandemic aid.  Getting capital to communities who have been shut out of traditional business lending is a good thing.

    My hope is that as the industry continues to mature that they don’t overlook what has worked well for the Main Street banks – access to people.  A relationship with someone who knows you, your business, and will work with partners to achieve desired results.

    If you are interested in selling your business and have a PPP loan with a fintech lender that you are trying to get forgiven without positive results, I am happy to be a problem-solving resource.  Relevant knowledge & experience are what separates the best mergers & acquisitions intermediaries from the herd. There is no replacement for knowledge, experience, and a high professional skill set in the sale of a privately held company or family business.

    If you have questions relating to the content of this article or selling a privately held company or family business Vishal Punj would welcome the opportunity to talk with you.  Mr. Punj can be reached at (425) 454-3052 or vishal@ibainc.com.

    IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, mergers & acquisitions, and real estate communities on subjects relevant to the purchase & sale of privately held companies and family owned businesses.  IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.

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