Dive Brief:

• Nonbank lenders PayPal, Intuit and Square were approved to offer direct loans to small businesses through the Small Business Administration’s Paycheck Protection Program (PPP), the companies announced.

• The $350 billion program, which is part of the federal government’s $2.2 trillion coronavirus relief package passed last month, is meant to help businesses with fewer than 500 employees cover payroll, business expenses and operations amid the economic disruption caused by the crisis. 

• Fintechs were able to begin applying to become direct lenders for the program last week after the Treasury Department issued loan applications for nonbank lenders. The ability to provide the loans is a major step for fintechs, which have been lobbying Congress for weeks for the opportunity to assist in the program.

Dive Insight:

Fintechs have long touted their ability to streamline the loan process for small businesses that, at times, have been overlooked by big banks.

Since the start of the crisis, fintechs such as Kabbage, which reconfigured its business to handle SBA loans, have been vocal in their calls to allow nonbank lenders to participate in the coronavirus relief effort. Kabbage is working with an unnamed bank to help process SBA loans and said it also plans to apply to become a direct lender. 

The trade group Financial Innovation Now (FIN), which represents Square, PayPal, Intuit and Stripe, sent a letter to Congress last month, asking that its members be included in emergency U.S. government funding.

"FIN is concerned that many small businesses will run out of working capital in less than three weeks," the group said. "Small businesses are not well served by traditional financial institutions, nor will existing federal small business loan programs deliver funds soon enough."

The ability to process the SBA loans during a national crisis is an opportunity for nonbank lenders to showcase how their technology sets them apart. 

PayPal and Intuit both announced their approval for the program Friday.

PayPal President and CEO Dan Schulman said the company is in a "race" to help save jobs amid the crisis.

"We are eager to deploy our capital and expertise to do our part in helping small businesses survive this challenging period," he said in a statement. "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."

Intuit said eligible applicants can apply for the PPP through the company’s QuickBooks Capital systems. 

Federal relief processing will initially be available for a subset of QuickBooks Online Payroll customers, the fintech said, adding that it will continue to expand the ability to apply to other customers in the coming days.

"We are focused on getting help to customers as quickly as possible as they navigate this unprecedented and challenging time," QuickBooks Executive Vice President and General Manager Alex Chriss said in a statement. "As the financial source of truth for millions of small businesses, we have a unique opportunity to help remove friction from the system. QuickBooks Capital will automate much of the application process so small businesses and other eligible applicants get relief quickly."

Jackie Reses, head of Square Capital announced Square’s approval in a tweet Monday morning, and said the company would roll out its loan applications this week. 

"We will notify sellers when their application is available via Square Dashboard, starting with employers whose application data we can verify automatically," she tweeted. "We expect to expand access to more small businesses soon. We know sellers need financial support now more than ever, and we’re committed to making funding accessible to as many small businesses as possible."