Payment facilitators PayPal and Square are among the non-bank companies authorized by the U.S. Small Business Administration to provide loans to small businesses through the agency’s Paycheck Protection Program.
PayPal announced on Friday that it had received approval to participate in the program.
“Small businesses have been hit especially hard by the coronavirus crisis. There is an urgent need to help every qualified business access the funding needed to ensure that as many workers as possible keep their benefits and paychecks. This is a race to save jobs in the present and for the future,” Dan Schulman, president and CEO of PayPal, said in a press release.
“We are eager to deploy our capital and expertise to do our part in helping small businesses survive this challenging period. We are thankful to Congressional leaders for ensuring the CARES Act allowed companies like PayPal to help distribute funds quickly to those businesses that are most impacted.”
While it’s not yet accepting applications, Square has also said that Square Capital is approved to provide funds. It’s working with its partner, Utah-based Celtic Bank.
The Paycheck Protection Program is a low-interest loan program designed to provide relief to businesses with fewer than 500 employees affected by the coronavirus. As part of the program, loan payments are deferred for six months, and lenders are not allowed to charge fees. Loans will be forgiven for businesses that keep their workers employed and use the funds for payroll, rent, mortgage interest or utilities.
According to the SBA, businesses could apply through any SBA lender or federally insured financial institution. “Other regulated lenders will be available to make these loans once they are approved and enrolled in the program,” the agency said on its website.
In a letter to Congress last month, the trade group Financial Innovation Now – whose members include Square and PayPal as well as Stripe and Intuit – noted that these companies have developed alternative lending platforms that move money to small businesses more quickly.
“Collectively, FIN member companies alone have a direct deposit and underwriting capability with over 20 million small business. FIN estimates that our companies could rapidly disburse approximately $100 billion in capital to vulnerable small businesses, in many cases within weeks,” the group’s executive director, Brian Peters, wrote.