CT Signs Agreement With FinTech Company To Manage $ 50 Million Bridge Loan Program
The state has struck a deal with an online lending company, which will help administer a $ 50 million bridging loan program that has been overwhelmed by a sudden influx of applications from businesses desperate for a buoy. bailout amid the health and economic crisis of COVID-19.
The name of the online loan company was not immediately available, but it will be revealed later this afternoon, said David Lehman, commissioner of the State Department of Economic and Community Development.
The fintech firm was one of three firms that responded to a hastily-prepared RFP that will help process and review loan applications and release the money. The provider agreed to provide the service for free, creating significant cost savings for the state, Lehman said.
The goal is to have loans in the hands of businesses by the end of this month, he added, noting that he realizes that time is of the essence to put money in between. hands of businesses facing declining revenues as a significant portion of the state’s economy remains closed to prevent the spread of COVID-19.
“We are very sensitive to the schedule,” Lehman said Friday morning. “Given the massive response, our intention is to make thousands of loans by the end of this month.”
DECD announced the bridge loan program in mid-March and received 5,200 applications within 48 hours of going live at the end of last month.
Dealing with these many loan applications is a huge challenge, and DECD and Connecticut Innovations – the state’s quasi-public venture capital arm – are unable to handle it if they want to pay the cash fast. to businesses that are strapped for cash, Lehman said.
The online lender will help process, secure and eventually disburse the qualifying business loans.
No loans were made, Lehman said, however, some applications were turned down because they did not meet basic program standards.
The loan program originally had only $ 25 million allocated, but that amount was doubled after it was inundated with requests.
The program allows a maximum loan of $ 75,000 with an interest rate of 0%, however, due to the high volume of applications, it is likely that the state will make smaller loans in order to provide capital for more. companies.
“Our tendency is to get more loans at potentially smaller balances and re-evaluate where we are at and where the federal stimulus packages are at,” Lehman said, adding that businesses were more likely to see loans from. $ 15,000 or $ 20,000, although a decision has not been finalized.
DECD and Connecticut Innovations have added additional staff to process program applications, but a more automated system is needed, Lehman said.
To be eligible for the loan program, qualifying Connecticut businesses must have 100 or fewer employees and be profitable by March 10, with no adverse personal credit report 60 days past due in the past six months. Borrowers must provide personal collateral for the loans and a credit score is required.
In addition, no real estate, tiered marketing, adult entertainment, cannabis or gun companies will receive the loans, DECD said.
The loans will have a term of 12 months, with the possibility of an extension of six months.