The government has not designated fintechs as lenders in PPP round II.

Fintechs are disappointed with their limited role in lending Paycheck Protection Program (PPP) loans to smaller businesses. The first tranche of $349 billion in potentially forgivable loans ran dry within just two weeks. Even though Treasury Secretary Steve Mnuchin had promised fintechs a role in paying out these loans, the Small Business Administration (SBA) only allowed traditional banks to make these loans by the time the money ran out. (FORTUNE)

SBA approvals came too late

The SBA granted approvals to a group of fintechs only late on Tuesday, April 14. The action was much delayed because they had only a day before the funds exhausted.

With approvals in hand, however, these fintechs were looking forward to playing a role in the supplementary PPP under consideration by the government.

Fintechs lobbied the government to allow them to lend small ticket loans of $50,000 or less meant for tiny businesses.

New bill for $310 billion

On Tuesday, the Senate approved a bill for additional PPP funding of $310 billion that included $60 billion for the really small businesses.

Unfortunately, fintechs did not make it into the list of eligible entities named to lend out the new package.

The bill authorized insured depository institutions, credit unions, and community financial institutions to lend the second tranch money. The bill also split these entities into two categories by asset size. Entities having assets between $10 billion and $50 billion will get to lend half, while those less than $10 billion will lend the rest.

Hot competition

Fintechs approved by the SBA will, therefore, scramble to compete with the above entities to lend the government-guaranteed loans.

Technically, they are ready and able to do so as soon as the money is released.

How much, before the new money dries up, is quite another matter.

(P.S. – According to a CNBC report, the new chunk of $310 in aid for small businesses is perhaps already spoken for. Because of the huge volume of pending applications already with the SBA, most, if not all of the money will be allocated to those in this “queue.”)

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