Averting Disaster: Small-Business Stimulus & Remote Identity Proofing

SBA Stimulus: Averting Disaster

I grew up in a small business. A very small business.

My dad managed a convenience store, my mom managed the books, and my brother and I managed the cash register and stocked the shelves. It was a 24x7x365 day operation. When an employee didn’t show up for their shift, one of us would have to work it, and when there was a hiccup in the local economy, we all felt it.

So, I understand and empathize with small-business owners around the world struggling to keep their heads above water and meet payroll because of the COVID-19 pandemic.

Small businesses are the lifeblood of our economy, employing 58.9 million people in the United States, or about 47.5% of the total private sector workforce. Collectively, they contributed $5.9 trillion to the GDP in 2014 (the most recent year for which this data is available).

With COVID-19, they’re fighting to keep the lights on.

Small businesses across America are already feeling the financial crunch from coronavirus restrictions that have millions of people taking refuge from the virus outbreak by staying at home and avoiding unnecessary shopping trips.

One analyst predicted that the disruption to businesses from coronavirus could lead to 15,000 permanent retail store closures in 2020, with the Economic Policy Institute predicting that the outbreak could potentially wipe out three million jobs from the U.S. economy before this summer.

A Glimmer of Hope

President Donald Trump just signed an unprecedented $2 trillion economic stimulus package to help flagging U.S. businesses and their employees — and small businesses are among those that will benefit.

Small businesses will have access to $350 billion in forgivable loans and this includes businesses and nonprofits (with fewer than 500 employees), the self-employed and gig economy workers. Larger organizations (over 500 employees) may also be eligible if they operate in certain impacted sectors including nonprofits, veterans’ organizations, hotels/accommodations and food services.

The U.S. Small Business Administration (SBA) currently guarantees about $25 billion in 7(a) loans to small businesses, and this additional $350 billion in lending authority would be on top of that. The SBA works with more than 3,000 lenders that will likely get tapped to dole out low-interest loans to help small businesses to keep their staff employed and dreams afloat.

But how can lenders properly vet small-business owners, when they can’t walk into your offices, which are also presumably closed?  Banks are transforming their business operations and their processes for new account creation as we speak to help compensate for the lost foot traffic to their branch offices.

The dilemma will be how these lending institutions can remotely verify the business owners who are applying for these loans. With this stimulus infusion, small businesses will be knocking down their virtual doors to access these funds. The vast majority of small-business owners are legitimate, hard-working professionals, but with this much money being thrown around, you can bet that cybercriminals will be drawn in — especially since there are few strings attached in terms of required collateral.

Historically, SBA lenders haven’t had the confidence — even after doing identity data checks — that a borrower is who they say they are. But, it’s now possible to be smarter about fraud without alienating potential applicants and sacrificing the lifetime value of a good relationship.

Enter Jumio Go for Good

Jumio can help. This past week, we launched the Jumio Go for Good initiative, a program designed to provide free identity verification services to any organization, including SBA-approved lenders, dedicated to COVID-19 relief.

Instead of requiring small-business owners to visit a local branch office, they can be verified online — quickly, easily and securely — by providing a picture of their government-issued ID and a corroborating selfie, using a smartphone or computer. We’ll make sure the ID document is legitimate and that the person in the selfie matches the picture on the ID and also ensure that they’re physically present (vs. a bot or deepfake). This biometric-based approach helps expedite applicant onboarding and approvals while safeguarding against fraud.

Naturally, you will need to perform other background and data checks too, but at least we can shoulder the identity proofing so you know the person you’re potentially extending credit to is the legitimate applicant.

In the days and weeks ahead, small-business owners will have some choice in which banks to choose from and that’s why SBA lenders need to streamline the onboarding process. The key is having confidence in an applicant’s identity and online identity verification is one of the simplest and fastest ways to establish trust remotely.

Given the large number of approved SBA lenders, online identity verification may quickly become a crucial competitive advantage in terms of quickly disseminating much needed capital to small business owners and nonprofits on the front lines and keeping cybercriminals at arm’s length.