BUILDING ON SUCCESS AND TRUST
As a trusted mission-driven nonprofit and U.S. Treasury-certified Community Development Financial Institution (CDFI), Prestamos CDFI has promoted economic and community development through lending since its origins in the 1980s. Most recently, we played an integral role nationally in supporting small businesses during the COVID-19 pandemic, providing over 400,000 Paycheck Protection Program (PPP) loans to underserved communities in crisis.
In December 2022, a U.S. House of Representatives subcommittee published a report on financial technology companies (fintechs) who participated in issuing PPP loans during the pandemic. The report mentions Prestamos and highlighted our mission-focused efforts to assist underserved borrowers in minority communities. In helping as many small businesses as we could, we did so within a framework of established SBA guidelines and rules. Applying SBA regulations to prevent fraud, Prestamos denied many PPP loan applications that did not meet the eligibility requirements. In fact, our compliance program resulted in a 57% denial rate.
We appreciate that Congress recognizes the important role of nonprofit lenders in supporting small businesses nationwide through the PPP. There have been headlines regarding this report and an SBA review of PPP lenders, and it is important to note:
Prestamos providing PPP loans to small businesses is a meaningful and impactful success story of the program. Both the Subcommittee and SBA have noted Prestamos’ positive role in providing PPP loans.As a non-profit CDFI, Prestamos worked to make PPP loans accessible to communities of color and other underserved communities who en masse were either ignored or denied initial pandemic-related economic relief assistance from mainstream banks and lenders.
Almost all of our PPP loans went to small businesses and sole proprietors, providing expedited emergency support to help keep doors open that otherwise would have been shuttered. The vast majority (77.8%) of our PPP loans went to minority-owned businesses. We were able to help hairstylists, barbers, real estate agents, ride-share drivers, custodians, landscapers, construction contractors, musicians, artists, street vendors, and other small business owners and operators. Our average loan amount was $15,000.
Prestamos supports efforts to identify and prevent fraud and enhance the integrity of SBA’s lending programs. We proactively are collaborating with Congress and with the SBA to finish out the PPP as Congress intended and to improve SBA lending programs in the future. And we are proud of the round-the-clock work our Prestamos employees did to get funds to those Congress intended to serve. Prestamos remains committed to serving these hardest-hit communities and stamping out any fraud, waste, or abuse that prevents small businesses and their employees from receiving the benefits intended to keep them employed and contributing to our national economy.
In coordination with the SBA, Prestamos is working to enhance the role of nonprofit, community-based lenders. Prestamos is steadfast in its mission to help small businesses in low-income areas not just to survive, but to grow and thrive, strengthening all aspects and all members of our communities.
FREQUENTLY ASKED QUESTIONS
What is the status of Prestamos with the SBA?
Federal leaders praised Prestamos for successfully getting PPP loans to small businesses in marginalized communities. Prestamos remains in good standing with the SBA and continues to partner with the agency in service of its missions through numerous programs, including the Community Advantage Loan Program, the Investment in Micro-Entrepreneurs (PRIME) Program, and the Microloan Program. Prestamos also partners closely with the U.S. Department of Treasury, and recently received a $2.5 million Treasury grant to help strengthen its efforts in underserved communities and promote a more equitable, resilient, and prosperous local economy.
Did Prestamos follow fraud prevention guidelines for the PPP?
Yes. We followed SBA’s instructions to identify and mitigate PPP fraud. Our own compliance program actually resulted in the denial of 57% of the initial PPP loan applications we received. Under these guidelines, Prestamos was able to have a big impact through the PPP, and we provided over 400,000 SBA PPP loans. We primarily funded lower-income borrowers that were sole proprietors and independent contractors and were overlooked by traditional lenders. This aided them in keeping their businesses open and in retaining their workforce. We support any effort to identify and correct fraud and protect the integrity of SBA’s loan program, which is why we are contributing to those efforts by the Subcommittee and the SBA.
Will inquiries into the PPP program prevent Prestamos from continuing to serve communities?
Absolutely not. Non-profit, community-based lenders play a critical role in reaching those in need, and we remain dedicated to that mission. We are still working with SBA to finish out the PPP as Congress intended.
How is Prestamos helping to enhance SBA Program integrity and prevent fraud?
We support every effort to identify and prevent fraud in SBA lending programs, which is why we contributed to those efforts led by Congress and will continue to be a partner to SBA in strengthening program integrity.