Also in late February, Blueacorn and Womply got an unexpected boost from a major rule change by the Small Business Administration, which oversaw the loan program. Concerned that women and minority-run businesses were being disproportionately left out, the Biden government revised the loan formula to give sole proprietorships – a group that includes contractors and gig workers – loans based on their reported earnings, not their profits. Overnight, millions more qualified for help. Attracted by the marketing campaigns, they trudged towards the two companies.
In early March, “we were overwhelmed by demand,” said Blueacorn Mr. Calhoun, a private equity veteran who joined the company earlier this month to steer its growth. “We had a 24-hour period in which we went from 15,000 new customer service tickets to 27,000,” he recalls. “These are Amazon-like levels.”
Blueacorn rented call centers and trained hundreds of temporary workers on troubleshooting. Womply dispatched almost all of its 200 employees to work on credit issues. Both companies were still struggling to keep up. On Reddit groups and social media sites, thousands of borrowers complained of delays, poor communication, and trouble fixing bugs.
Louis Glatthorn, an Uber driver in Boone, NC who thinks Bob applied on Womply’s website April 7, and two weeks later signed the papers for a $ 7,818 loan. But the money – which is listed as approved on government records – was not paid by Benworth Capital, one of Womply’s partners. Mr Glatthorn’s attempts to reach out to Womply for help were unsuccessful.
“You can never speak to or actually contact a person,” he said. A representative from Womply declined to comment on Mr. Glatthorn’s experience.
Others had a quieter run. Dan Bourque, an Uber driver in San Francisco, saw Womply’s ads and applied for a loan in mid-April. Seventeen days later, he had a deposit of $ 10,477 – funded by Fountainhead SBF, another Womply partner lender – in his bank account. For this loan, the process was “flawless,” he said.
The money flows in
The millions of tiny loans that the two tech companies made possible, combined with the decision by Congress to make small loans more lucrative, resulted in gigantic payouts for small lenders. Last year Prestamos made $ 1.3 million for its lending. This year, it will raise nearly $ 1.2 billion this year, according to a New York Times lender fee calculation based on government data.
