First, what is Baseline Protocol? Based on Ethereum blockchain, Baseline is a smart contract and tokenization platform which employs zero-knowledge proofs, off-chain storage and distributed identity to provide solid security to private enterprise data against cyberattacks and other privacy concerns.
Ernst & Young in collaboration with industry powerhouses Microsoft and ConsenSys have recently announced Baseline — an open-source package of blockchain tools that focuses on securing business processes. The project which was initiated in 2019 by EY, Microsoft, and Consensys, improves on the previous approaches which had difficulty keeping up with the highest standards of privacy & security.
Recently in a Forbes article by Jason Brett, it was mentioned that many in congress had suggested Blockchain as a solution for COVID-19 stimulus payments(CARES Act). Not necessarily as form of digital currency or crypto but as a way of efficiently distributing, auditing, and tracking the payments. But could Banks and companies that received the loans benefit from a protocol like Baseline that is transacted on a public ledger like Ethereum but private information stored in a secure off chain file system. Some of the deficiencies of the first round of the PPP was that many of the small businesses that had applied for a loan did not have previous banking relationship with the bank they requested the loan from. This caused the “trust” issue, which constantly is an issue when not being able to verify data inside a vacuum or siloed information sharing system. Using a protocol like Baseline information could be shared and trusted in an automated way with all the parties in control of their own data. For a small business, the documents needed were quite a lift and not easily compiled or even shared in an efficient way. Here is the list of the information and documents needed when applying for the loans: Basic information about your business and how to contact you, Average Monthly payroll costs, Details of full-time employees and their payroll costs, 2019 Tax Forms (all four quarters of 2019, and Q1 ’20 if available)
Payroll processor records
Proof of mortgage or rent, mortgage interest, and utility expenses, Articles of Incorporation / Organization (must have the established date), Verification of all owners of over 20%, as documented by:
- 2019 Schedule K-1s (required for S corporations); OR
- 2018 Schedule K-1s with a statement explaining how/if 2019 ownership is different; OR
- 2019 Form 1065 (U.S. Return of Partnership Income) if incorporated as a partnership.
- For single-member LLCs, ownership is verified in personal 1040 Tax Return Schedule C; OR
- Bylaws or Operating Agreement that explicitly state current ownership percentages;
Copies of a government-issued ID for all individuals owning 20% or more of the business, mail addresses for all individuals owning 20% or more of the business, Proof of Active and Good Standing status of the business, Completed form of the SBA’s PPP application form. And finally, Electronic funds transfer information. Now that has some very personal and sensitive information and on top of that your bank had to be a SBA 7a lending bank for you to even work with your current bank. If not, as a small business owner you would have to go find a bank that did provide SBA 7a loans. A smart contract could be generated to have this information securely shared and items executed on via the use of Ethereum and the Baseline protocol between many Banks and small businesses. An added benefit to the Banks and the companies receiving the loans is they could immediately show compliance when audited by the IRS, because everything was transacted on a single ledger. Years ago this would sound like a fantasy and an impossibility but I believe the Blockchain community is edging closer to making this a reality.