Online lender Kabbage has created an app that allows Uber drivers to apply for Paycheck Protection Program loans from the Small Business Administration from their phones.
The PPP program was originally created to help small businesses continue to pay their employees throughout the coronavirus quarantine, but it has recently been extended to independent contractors such as Uber drivers.
Kabbage has made more than 130,000 SBA-approved PPP loans worth more than $ 3.8 billion through a platform it built just before the program began on April 3.
The company used many already built modules to assess, approve and submit a PPP loan application to the SBA to create the app for Uber drivers, including Know Your Customer, Know Your Company, Ultimate Beneficial Owner, fight against money laundering, fraud and identity checks.
He also used technology from developers Kabbage designed to apply optical character recognition, or ORCR, to documents attached to loan applications, such as tax forms. Sometimes the scans of these documents are good and sometimes they are extremely difficult to read, according to Kabbage CEO Rob Frohwein. OCR technology must extract data from these documents, data used in Kabbage’s automated lending process.
Kabbage’s system mimics the work of teams of underwriters and document reviewers, including data verification.
Developing the PPP system “has been the most breathtaking weeks of my entire working life,” said Frohwein. “It was anarchy and the most incredible thing I have ever seen.”
Although everyone on the project was working from home because of the pandemic, Frohwein said he felt like they were all together. The team had a chat thread throughout the day and video conference calls at 11 a.m., 4 p.m. and 10 p.m. every day for several weeks.
About 75% of Kabbage’s PPP loans go through the SBA system without human review. The others ask for eyes on them, to look at things that didn’t seem clear.
Uber drivers have already started submitting loan applications through Kabbage’s program, although the program was not announced until Tuesday.
A key difference between what Kabbage does for Uber drivers and what others are offering is that Kabbage pre-fills the loan application with Uber’s data, according to Frohwein. Drivers can apply for loans directly from their smartphones, with most of the information already provided.
“I think it’s a huge step forward for customers to be able to go through a pre-populated application and for us to be able to understand the data as well,” Frohwein said. Drivers can also add other sources of income besides Uber in the loan document.
“It really makes the process a lot smoother,” he said.
In less than 10 states, Kabbage is not a direct lender and provides loans through Cross River Bank or Customers Bancorp.
In the first round of PPP, independent contractors and self-employed workers, a group that includes Uber drivers, were not included. Just before the second wave, the self-employed were allowed to apply. They can receive about two months of income from the program.
According to Frohwein, Kabbage’s average loan amount in the paycheck program is $ 29,000, which is lower than the average for most banks and well below the program’s average, which was $ 113,000. to June 7.
Kabbage has also built a loan cancellation platform. Frohwein said its developers are ready to change this program if and when lawmakers streamline the loan forgiveness request for small borrowers, as they talk about doing.
It is not yet clear how Uber drivers and other self-employed workers will be able to claim forgiveness. Small businesses will be eligible by spending at least 60% of the PPP loan proceeds on payroll over a 24 week period. Uber drivers are not paid; loans can end up being automatically canceled.
Kabbage himself had a difficult March. Some of her clients went bankrupt, she had to stop lending, and she put almost half of her staff on leave.
When the paycheck program arrived, Frohwein refocused the entire company on it.
Some employees on leave were brought back, working from home. The Atlanta-based company will continue to focus on PPP until the June 30 deadline. He will also continue to develop payment and treasury products for small businesses.
Meanwhile, Kabbage struck a deal last week with MountainSeed, a real estate service provider for banks and credit unions, to give clients of community banks and credit unions access to PPP loans for their small businesses. corporate clients in non-urban areas.
