Also at the end of February, Blueacorn and Womply got an unexpected wind of support thanks to a major rule change from the Small Business Administration, which oversaw the loan program. Concerned that women and minority-run businesses were disproportionately excluded, the Biden administration overhauled the loan formula to give sole proprietors – a group that includes entrepreneurs and workers in concert – loans based on their reported income rather than their profits. Overnight, millions more qualified to receive help. Attracted by the marketing campaigns, they rushed to the two companies.
In early March, “we were overwhelmed with demand,” said Mr. Calhoun of Blueacorn, a private equity veteran who joined the company this month to help manage its growth. “We had a 24 hour period where we went from 15,000 new customer service tickets to 27,000,” he recalls. “These are similar levels to Amazon.”
Blueacorn has hired call centers and trained hundreds of temporary workers to resolve issues. Womply has redeployed almost all of its 200 employees to work on credit issues. The two companies are still struggling to keep up. At Reddit Groups and social media sites, thousands of borrowers have complained about delays, poor communication, and issues resolving errors.
Louis Glatthorn, an Uber driver in Boone, NC who goes by name Bob, applied on Womply’s website on April 7 and signed the documents two weeks later for a loan of $ 7,818. But the money – which is listed on government records as approved – was not paid by Benworth Capital, one of Womply’s partners. Mr. Glatthorn’s attempts to reach Womply for assistance were unsuccessful.
“You can never talk to a person or make contact with yourself,” he said. A representative for Womply declined to comment on Mr Glatthorn’s experience.
Others had a smoother run. Dan Bourque, an Uber driver in San Francisco, saw the Womply ads and applied for a loan in mid-April. Seventeen days later, he had a deposit of $ 10,477 – funded by Fountainhead SBF, another of Womply’s partner lenders – in his bank account. For this loan, the process “has been flawless,” he said.
Money is pouring in
The millions of small loans made by the two tech companies, coupled with Congress’ decision to make small loans more lucrative, resulted in gigantic payments for small lenders. Last year, Prestamos made $ 1.3 million for its loans. This year, he will collect nearly $ 1.2 billion, according to a New York Times calculation of lender fees based on government data.