What Are Fintechs and How Can They Help Small Business?
Online financial service companies are filling a gap, especially as companies have altered how they work.What Are Fintechs and How Can They Help Small Business?
This article is part of our continuing Fast Forward series, which examines technological, economic, social and cultural shifts that happen as businesses evolve.
Dominick Pietrzak, who owns a film-production company in Brooklyn, was among the small business owners to receive a coveted and potentially forgivable loan in the first round of the Paycheck Protection Program. How he did it was, in retrospect, the result of a convergence of very unlikely events. What Are Fintechs and How Can They Help Small Business?
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As a business with just one full-time employee — himself — he first applied for the New York City Employee Retention Grant Program while he was watching Mayor Bill de Blasio talk about the program on television. Three days after seeing the announcement on TV and applying, a few thousand dollars was in his bank account.
For the Small Business Administration’s P.P.P. loan, the most coveted of the early relief efforts, he first tried to apply through his bank, Capital One, but they were not taking applications. That bank, in fact, did not get its system running until the program’s first round was out of money.
But that turned out to be a stroke of luck for Mr. Pietrzak. Searching for a way to keep his small business afloat, he took a chance and answered an offer from his bookkeeping company, Bench, an eight-year-old financial technology start-up.
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Bench, he said, connected him to Fundera, a seven-year-old lending platform for small companies. On a Sunday he signed closing documents from Cross River Bank in New Jersey — which he had never heard of — and two days later found the P.P.P. money in his bank account.
“I was a little skeptical with Fundera and Cross River Bank, but I just kept trying and redoing the application and eventually it went through,” Mr. Pietrzak said. “There were some hiccups with the site, but after I did the application a few times, it went through.”
In the end, hiccups included, he received the kind of service and financial support in the early days of the program — from two little known fintech entities and a little-known bank founded in 2008 — that many small business owners with well-established traditional banking relationships did not get.
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“Prior to this crisis you had fintechs specializing in the under-$50,000 loans,” said John Pitts, the head of policy for Plaid, a fintech company that serves as a link between fintech apps andsome 11,000 financial institutions, and a former deputy assistant director of intergovernmental affairs at the Consumer Financial Protection Bureau. “It’s not surprising you don’t see this cohort well served” by the big banks.
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