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Financial Services Law Insights and Observations

House subcommittee explores fintech companies’ role in PPP loan processing

Fintech U.S. House SBA CARES Act Small Business Lending Covid-19

Fintech

On May 27, the House Select Subcommittee on the Coronavirus Crisis sent letters to two banks and two fintech companies seeking information on the companies’ handling of loan applications under the Paycheck Protection Program (PPP). According to a press release announcing the launch of the subcommittee’s investigation, the letters (available here, here, here, and here) were sent to four companies that facilitated PPP loans but may have allegedly failed to adequately screen PPP loan applications for fraud. The subcommittee notes that recent reports lend “credence to reports that criminal actors sought out [fintechs] for fraudulent PPP loans because of the speed with which the [fintech] companies processed the loans—which in some cases could be approved in ‘as little as an hour’—and the fact that the [fintech] loan application process appeared to include very little scrutiny of its applicants.” The letters request documents and information to assist the Subcommittee in understanding the fraud controls and compliance systems that the companies applied to their PPP loan programs.

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