BoeFly CEO shares his take on small business lending and PPP
BoeFly CEO Mike Rozman said his company was well positioned in the fintech lending space when the Covid-19 pandemic began to cripple the global economy. This is because BoeFly, a pioneer in the online lending space, had developed technology to match small business borrowers with lenders in a simple and efficient process.
Nonetheless, the economic meltdown resulting from Covid-19 has become a mess of beasts for borrowers and lenders, all of whom are trying to fix the problem and get back to business. Yet despite the built-in structural advantages available to online lenders, “we also had to make some technological adjustments,” says Rozman.
“When the government announced the CARES Act paycheck protection program and rolled out a program within a week, it was just too fast for the banking industry,” he says. Rozman says that while lawmakers and bureaucrats devised a well-meaning system based on speed, it forced banks to act too quickly and without the proper infrastructure in place.
Covid-19 has also thrown an adjustable wrench in all SBA loans, crushing its resources and capabilities to meet overwhelming demand. “Loans everywhere just aren’t happening right now, and the SBA won’t get back to normal until all of this is behind us,” he says.
Then there was the Herculean task of dishing out $ 350 billion to business owners in what turned out to be a matter of days, as businesses of all kinds across the country scrambled to get them. funds they desperately needed. To make matters worse, and in a controversial manner, large state-owned enterprises and companies financed by the EP have recovered a good part of these funds. (See editor’s note at the end of this article.)
The result is that several thousand small businesses that applied for loans couldn’t get some of that $ 350 billion before the money ran out. Meanwhile, many franchisees were wondering how they could pay their employees and stay in business.
Still, says Rozman, “I know we’ve been able to help some operators access some of that money that otherwise wouldn’t have. “
Rozman says his franchisor clients are frustrated with the situation because they hear frustration in the voices of their franchisees. “Everyone wanted to get that money out quickly, but you can’t roll out a new program in a week. “
In the meantime, says Rozman, he has encouraged his franchisor clients to communicate often and share any updates they have with franchisees and other business partners to keep everyone informed and at ease. And like many others, BoeFly is doing its part to help by providing the latest updates on his Covid-19 web page.
For franchisees, says Rozman, it’s critical to understand that they must use at least 75% of any P3 loan they receive for payroll so that it is 100% forgiven later.
“If you have P3 money, you have to make sure you are using it in a way that makes it totally forgivable,” he says. “Second, put yourself in a position to get financing. Keep your home tidy, use technology, and work with the right partners. This includes your banker – and acts as early as possible to improve your chances of receiving new round funding before it runs out.
Rozman believes that when the financial chaos of Covid-19 finally sets in, its effects on small business borrowers will be long lasting. “There will be new underwriting standards that take into account what type of business it is and how sensitive it would be to something like Covid. “
Even so, as he works today to help small business operators, Rozman also takes a long-term view and sees better days ahead. “Covid-19 was a gigantic flash in the pan. But it will pass. We will get out of this and business will flourish again. “
Editor’s Note: Yesterday (April 23), Congress approved a new $ 484 billion relief bill, of which $ 310 billion is earmarked for PPP funding. With large corporations having clawed back some of the previous $ 350 billion – but now, with many returning it now after pressure from the public and Congress – time will tell how the distribution of funds will work this time around for small businesses. See article 2 of this newsletter for an update on new and stronger regulations for borrowers and other franchise specific changes.
Mike Rozman is CEO of BoeFly, which helps potential and existing small business owners obtain fast, efficient and competitive financing through its online correspondence platform by connecting borrowers with lenders from its more than 5,000 banks participants and specialized finance companies. Contact him in line, or dial 800-277-3158.