$33 Million: When a PPP Lender's Delays Cost Small Businesses Their Shot at Emergency Funding

Biz2Credit, Inc. has agreed to a record-setting $33 million settlement with the Federal Trade Commission, resolving allegations that the small-business lender promised to quickly process Paycheck Protection Program loan applications but instead left many small businesses stuck in limbo — unable to get funded and, in numerous cases, unable to withdraw their applications and seek funding elsewhere before the program's money ran out.DOCUMENTED

The settlement was announced alongside a related $26 million settlement with a second PPP lender, Womply, bringing the FTC's combined recovery in the two cases to a reported $59 million for small-business redress.DOCUMENTED

Why speed mattered so much

The Paycheck Protection Program was an emergency lending program administered by the Small Business Administration, created to help small businesses keep employees on payroll during the COVID-19 pandemic. Because PPP funds were allocated on a first-come, first-served basis and available only while congressionally appropriated money lasted, a business's ability to get its application processed quickly could determine whether it received funding at all.DOCUMENTED

When the SBA authorized a number of lenders to submit PPP applications on businesses' behalf, Biz2Credit moved quickly into that line of work.DOCUMENTED The FTC's complaint alleges the company advertised fast processing to attract small-business applicants desperate to secure funding before the program's money ran out.DOCUMENTED

Stuck in the queue, unable to leave

According to the FTC, in numerous instances Biz2Credit did not let consumers promptly withdraw their applications even when businesses asked repeatedly to do so.DOCUMENTED One consumer's complaint, quoted in the FTC's account of the case, captures the stakes: "We have asked to withdraw this application so many times. It has been over a month, and we don't understand why the loan is still active with SBA. …You are preventing us from getting the help that is crucial to our business."DOCUMENTED

Because PPP was a temporary program that ended when its funds ran out in mid-2021, some small businesses subjected to these delays lost their opportunity to obtain PPP funding entirely — not merely from Biz2Credit, but from any lender, since the program itself had closed while their application sat unresolved.DOCUMENTED The FTC's complaint charges the defendants with violating the FTC Act and the COVID-19 Consumer Protection Act, a law enacted specifically to give the FTC additional tools to pursue pandemic-related consumer fraud.DOCUMENTED

What the settlement requires

In addition to the $33 million monetary judgment, the settlement with Biz2Credit prohibits the defendants from misrepresenting key information about loan applications or any material fact about a government benefit program, and separately bars Biz2Credit from failing to allow consumers to promptly withdraw their applications going forward.DOCUMENTED The Commission vote authorizing the staff to file the complaint and proposed stipulated order was 3-0, and the complaint and order were filed in the U.S. District Court for the Southern District of New York.DOCUMENTED

Because PPP funding was first-come, first-served and time-limited, a delayed application wasn't just an inconvenience — for some small businesses, it meant losing the funding entirely.

A companion case against Womply

The Biz2Credit settlement was announced together with a related action against Womply and its CEO, Toby Scammell, who agreed to pay $26 million to resolve similar FTC charges that they preyed on small businesses — particularly one-person businesses like gig workers — seeking PPP funding.DOCUMENTED Combined, the two settlements totaled $59 million, which the FTC said would be used for redress to small businesses harmed by the practices challenged in both complaints.DOCUMENTED

Why the case still matters years after PPP ended

Even though the Paycheck Protection Program itself closed years before this settlement, the case remains a significant marker in the FTC's small-business protection docket because it establishes that ordinary consumer-protection principles — truthful marketing, the ability to withdraw from a service, and accurate representations about a government benefit — apply just as fully when the "consumer" harmed is a small business owner rather than an individual shopper.REVIEWED The case also illustrates how emergency government programs, however well-intentioned, can create new avenues for deceptive intermediaries to profit from urgency and confusion during a crisis.REVIEWED

How the trap worked in practice

According to the pattern described in the FTC's account of the case, a small business owner who applied through Biz2Credit had every reason to assume the application was moving forward given the company's marketing promises about processing speed.REVIEWED When the application instead sat unprocessed, a business owner's rational next step would be to withdraw and apply through a different, faster lender before the program's funding ran out — but the FTC alleges Biz2Credit made that withdrawal difficult or impossible in numerous cases, effectively trapping the applicant in a queue that might never resolve while the clock on the broader program kept running.REVIEWED

That dynamic — combining a false speed promise with an obstacle to leaving once the promise proves false — is a structure the FTC has identified across a range of subscription and lending products, not just PPP-specific lenders, and it underlies much of the agency's broader "click-to-cancel" and negative-option enforcement priorities in the years following the Biz2Credit case.REVIEWED

Lessons for lenders serving small businesses

The settlement's practical guidance for financial-services companies marketing to small businesses is straightforward but consequential: any claim about processing speed, approval likelihood, or program eligibility must be substantiated, and any customer who wants out of a pending application or enrollment must be able to leave promptly rather than encountering procedural friction designed, intentionally or not, to keep them locked in.REVIEWED Because Biz2Credit was one of several authorized PPP lenders operating under substantially similar SBA rules, the case also underscores that a government authorization to participate in a program does not itself vouch for a company's marketing claims or customer-service practices — that oversight function fell to the FTC after the fact rather than the SBA at the point of enrollment.REVIEWED

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