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  1. #1
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    PPP-Interesting Read KYC!

    In an effort to distribute PPP funds to struggling small businesses faster and more efficiently, the SBA gave fintechs the green light to participate in the program on April 14, 2020. However, the SBA’s need for speed may have had some unintended consequences. A recent analysis conducted by Bloomberg found that 75% of the approved PPP loans that have been connected to fraud were handled by fintech companies.
    The data suggests that scammers were drawn to using fintechs due to the automated nature of their application process and ease of use. According to a report published by fintech lender Kabbage, over 75% of the applications they received were approved “without human intervention or manual review” and their median approval time was just 4 hours. Another fintech company, BlueVine adds that some of their customers’ loans were approved so quickly that it left people wondering whether they had received the approval notification by error.
    Normally, firms attempting to automate underwriting end up on the hook for losses. However, because PPP loans were 100% guaranteed by the SBA, fintechs could use a more formulaic approach. Bloomberg reports that the fintechs have not been accused of any wrongdoing, as regulators allowed lenders to rely on self-certifications. In fact, many fintechs have stated that they implemented due diligence measures that went well beyond the minimum SBA requirements. BlueVine says 9% of the applications they received were rejected on the basis of suspected fraud and that less than 2% of the approved loans raised concerns.
    The Department of Justice says many of the fraud cases that have been brought to their attention could have been caught with a simple manual Google or state record search. In order to avoid these type of scammers on any type of business loan, it is recommended that lenders perform a quick Google search to check that the results match the information that the borrower provided.
    Seacoast Business Funding, a division of Seacoast Bank
    Kevin Henry-VP Business Development
    Kevin.Henry@SeacoastBF.com
    561-623-1872
    www.seacoastbf.com
    Boynton Beach, FL

  2. #2
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    So what happens with the info from the analysis that Bloomberg conducted?

    Will someone be going after all those fraudulent loans?

  3. #3
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    Quote Originally Posted by Winning View Post
    So what happens with the info from the analysis that Bloomberg conducted?

    Will someone be going after all those fraudulent loans?
    Winning,

    All banks go through regular audits on KYC/AML rules. You can bet auditors will be paying close attention to those that accepted PPP from non-bank customers.

    Blomberg does not have to do any work here. The feds already know there are problems and will find the frauds eventually.
    Seacoast Business Funding, a division of Seacoast Bank
    Kevin Henry-VP Business Development
    Kevin.Henry@SeacoastBF.com
    561-623-1872
    www.seacoastbf.com
    Boynton Beach, FL

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