Adam Seery, chief operating officer at Harvest, said the company “had systems in place to monitor and catch fraud through the PPP program.” Seery said he couldn’t comment further until he had seen the report, but he also took issue with the categorization of Harvest as a financial-technology company. He said Harvest considers itself a “non-bank lender.”
A Cross River spokesperson said its fraud-detection standards “far exceeded” government requirements. By not limiting its program to existing customers or by minimum size, the lender served almost half a million businesses. That “helped save more than 1.4 million American jobs,” according to the bank’s emailed statement.
In response to the study, Capital Plus sent a letter to the University of Texas at Austin President Jay Hartzell, saying that the firm believes the study included proposed loans that were never made. Capital Plus ended up declining more than 20% of the loans that are marked as approved or funded on the Small Business Administration’s website and has been working to update the data, according to a letter from Chief Executive Officer Eric Donnelly. The firm expects that information to be revised by the end of August.
Not all the fintechs involved in the PPP program can be lumped together in the same category. Square Inc. and Intuit Inc. were among lenders with the lowest suspicious-loan rates, according to the report.
“Those fintech originators have been around a while. They have a reputation. They have procedures,” Griffin said. “Even though these findings, the misreported loans, tend to concentrate in fintech, it may also be a function more of the stability of the business. So these larger fintech companies that have been around seem to have good standards and procedures in place.”
This article was provided by Bloomberg News.