PayPal is now offering Paycheck Protection Program loans to more than 10 million small businesses - Fortune

PayPal is now offering Paycheck Protection Program loans to more than 10 million small businesses - Fortune

PayPal is now offering Paycheck Protection Program loans to more than 10 million small businesses - Fortune

Posted: 10 Apr 2020 12:00 AM PDT

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Small business loan program expands with PayPal, Square, Intuit - ABC News

Posted: 14 Apr 2020 12:00 AM PDT

ABC News Corona Virus Government. Response

A number of fintech companies can participate in the Paycheck Protection Program

A number of fintech companies -- many of them household names -- can now participate in the federal government's Paycheck Protection Program, and that is good news for scores of small business owners who might not have existing relationships with larger banks which have prioritized that in accepting applications so far.

Square, PayPal and Intuit are among a group of non-traditional lenders the Small Business Administration has now approved to participate in this $350 billion program which provides government-backed, low interest, forgivable loans to rescue small businesses crushed by the novel coronavirus' economic impact.

This comes as the PPP is nearly out of cash and is still plagued by problems, including some that still exist with SBA's online loan application portal used by all lenders known as E-Tran, which was down on Monday, according to a banking industry source. The SBA denied this to ABC News on Monday, with spokeswoman Jen Kelly saying, "E-Tran is running and doing billions of dollars in loans."

White House economic adviser Larry Kudlow, over the weekend, said in a Fox interview that the program was estimated to run dry by Friday, and Congress is still squabbling over funding.

It's unclear what the influx of lenders and demand on an already-over-burdened system might mean; still, demand for the program is high, according to these non-traditional lenders which lobbied Congress to be included in the PPP, and many intend to help the little guy, already counted among their clientele.

PayPal, which serves more than 10 million small businesses in the U.S., has started accepting applications, and according to spokesman Joe Gallo, has already funded some loans, though it would not disclose further details.

The company is prioritizing existing customers, though not ruling out opening the door to others.

"At this time we are focused on our more than 10 million U.S. small business customers. We continue to monitor the situation and update as needed," Gallo told ABC News.

Gallo also said that his company's participation in the program would mean that much-needed aid would flow to underserved communities that he called "banking deserts" -- counties where banks have closed since the 2008 financial collapse.

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Square -- which has millions of sellers globally, with most in the U.S. -- plans to start taking applications this week, according to spokeswoman Katie Dally who told ABC News that the company sees this as a huge opportunity to help sole proprietors and independent small business owners.

Though the company will eventually be open to all small businesses, Square has planned a "rolled out application launch," prioritizing existing customers who can easily auto-populate forms, like payroll for those who use Square Payroll.

"We can easily port data for those people, so it will go much faster," Dally said. "We do expect high demand. We've been working with our seller base since April 3."

Both Square and PayPal partner work in partnership with banks, Celtic Bank and WebBank, respectively.

Intuit said its Quick Books Capital program would be able to "simplify, automate and expedite the PPP application and funding process."

"We are focused on getting help to customers as quickly as possible as they navigate this unprecedented and challenging time," said Alex Chriss, EVP and GM of QuickBooks.

Like Square and PayPal, Intuit said it would prioritize existing customers, as well.

"PPP federal relief processing will initially be available for a subset of QuickBooks Online Payroll customers who will be able to begin applying as early as next week," the company announced on Friday.

"Validation of payroll information is necessary to complete the PPP application. For QuickBooks Payroll customers, the customers' data is already in the QuickBooks system. As a result, we are well positioned to help expedite the loan application process for this group. One in 12 American workers are paid through our payroll systems, which makes this an impactful place to start," said Luke Voiles, VP and Business Leader of QuickBooks Capital.

As of this weekend, Kudlow said PPP had seen some 661,000 loans approved totaling $168 billion. Neither the SBA nor the Treasury Department would say how much money had been disbursed.

"Those are enormous numbers. That's one reason, by the way, our estimates are we're going to run out of money for the small business thing April 17th," he said. "That's why we would like the Congress to help us with an additional $250 billion."

There is little to no disagreement over whether or not to increase PPP by that amount, the question remains, can Democrats and Republicans come to an agreement on whether to fund other programs and urgent needs now or save those for the next, all-but-certain stimulus package.

ABC News' Sarah Kolinovsky contributed to this report.

What to know about coronavirus:

PayPal’s ‘Pay In 4’ Expands Installment Credit Options For PayPal Users -

Posted: 31 Aug 2020 12:00 AM PDT

Capturing consumers online and getting them to convert to a buyer at the online checkout this holiday season will be both more complicated and higher stakes than ever before, Doug Bland, PayPal's senior vice president of global credit, told Karen Webster in a recent discussion. That's why, he said, that PayPal has today (Aug. 31) announced a new buy now, pay later product for PayPal users called "Pay in 4" which will be available to all merchants that accept PayPal as a payment option.

With Pay in 4, PayPal customers have an option to pay 25 percent of an item's price upfront, then pay the rest over six weeks through three equal payments. This program is for purchases between $30 and $600 and there are no interest charges or other fees (except for late fees if someone doesn't pay on time). For consumers, Bland said, Pay in 4 offers a near-ubiquitous online installment payment experience given PayPal's penetration of online merchants (79 percent of the top internet 100).

"What we continuously hear from businesses of all sizes is that they are looking for trusted ways to help drive sales [and] attract customers without taking on additional costs," Bland said. "At the same time, what we hear from our consumers is they are looking for flexible and responsible ways to pay when they shop. This has all accelerated during the pandemic, and this economic uncertainty has created additional stress for the retailers and for consumers."

Bland said there would be some credit evaluation before PayPal approves a customer. Still, because of the modest loan sizes, he said that PayPal expects to approve the vast majority of applicants.

"Given the challenging and uncertain times we're living in, we felt it was more important than ever to provide this solution to help retailers help consumers," Bland said. "And we're going to make it available [in] time for the upcoming holiday shopping season."

 Pay in 4 Aims To Meet Consumers' Growing Interest In BNPL 

Pay in 4 isn't PayPal's first foray into the world of installment payments. PayPal with PayPal Credit, Bland said, was an early alt point of sale (POS) credit pioneer a decade ago, well before the alternative online credit option was given the "buy now pay later" moniker and offers consumers an interest-free line of credit option with payments spread over a six-month window. Pay in 4 is PayPal's newest addition to its Pay Later portfolio of credit options for PayPal users.

But Bland said that consumers looking to control their spending are increasingly attracted to BNPL options that allow them to defer payments while providing transparency in how those payments are structured and how much it costs to opt-in to that way to pay.

"We can imagine that this will resonate with the younger demographics already favoring installment payments, but also all demographics who want to avoid paying credit card interest and who maybe also looking to stretch out their funds over a six-week period," he said.

Pay in 4 – Helping Merchants Boost Sales 

Bland said the benefit for merchants is that Pay in 4 provides another payment choice for PayPal customers who already like and use PayPal to make online purchases. Bland said that PayPal data shows that PayPal checkout conversions are 82 percent higher than checkout without PayPal. When businesses promote PayPal Credit, they see a 21 percent increase in sales and a 56 percent increase in order values.

"That's really important because if you think about the scale of PayPal, we have over 300 million consumers around the world, [and] certainly a big chunk of that is in the U.S. market," Bland said.

Bland also said that making Pay in 4 available to consumers is free to merchants: free of added integration hassle and costs since it is simply another feature inside of the PayPal wallet for consumers, and it is free to offer. Pay in 4, he said, costs merchants nothing above and beyond their existing PayPal pricing when a sale is made. Pay in 4 sales proceeds are paid in total when a sale is made.

Merchants To Help Drive Pay in 4 Awareness 

When asked how PayPal plans to promote Pay in 4, Bland said PayPal believes merchants will take the lead as they have a rather powerful incentive to boost sales, particularly given the current economic environment and during the traditional make-or-break holiday season.

That makes merchants, Bland noted, the best promotional channel they have for igniting the new service, as they should. Merchants have the best grasp on their customers' needs and wants and thus the most logical path to align their needs with the value proposition of the Pay in 4 installment option.

The Pay in 4 Path Forward  

Bland added that Pay in 4 is just the latest move toward the democratization of financial services that has motivated PayPal's expansions more broadly into the credit market. Those efforts include Working Capital for businesses and PayPal Credit for consumers.

He said the goal is to keep deploying tools to make commerce more engaging, easier to use and ultimately more rewarding for consumers and the merchants they like to shop. Based on early beta tests of the product, Bland said that he's excited to see it launch and scale in the U.S. — and soon other markets, as well- and in time for holiday 2020.

"The demand [so far] we've seen is remarkable — and across all categories of merchants — from the largest enterprise merchants to the smallest mom and pop shops. "



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Five Common Ways To Fund A Small Business Beyond Personal Savings - Forbes

Posted: 30 Sep 2020 08:15 AM PDT

One of the most cliched statements in starting a small business is that "it takes money to make money"... but it is often true. Many businesses need an infusion of cash to buy essential components of their operations. For a pizzeria, that could be an industrial oven, and for a yard care business, that could be a commercial lawn mower.

A common funding practice many new business owners take is to use personal savings and start small by reinvesting profits into the business. This approach, known as bootstrapping, seems rooted in common sense, but can be restrictive to your business' growth and personal finances. If your business needs a large infusion of capital, you don't necessarily have to go it alone and shouldn't if it jeopardizes your financial security.

There are a number of funding sources available to new and established businesses beyond your personal savings. Here are the five most common. 

1. Banks and Credit Unions

As with your house and car, you can also seek funding for your business through loans from banks and credit unions. The positive aspect of going through banks for funding is that it gives you the ability to access large amounts of funds and build your business credit. A challenge is that the process can be lengthy and difficult as most lenders will want to see a detailed business plan and may expect a personal guarantee or collateral.

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2. Small Business Administration-Guaranteed Loans

Another challenge with banks is that they are often wary of lending to new businesses. Fortunately, the Small Business Administration (SBA) works with lenders to guarantee loans for aspiring entrepreneurs to increase access to capital by reducing the risk involved for the lender. They also have lower interest rates, but the approval time can be lengthy. 

3. Mission-driven Lenders

If you are unable to obtain a traditional bank or SBA-guaranteed loan, another option is a mission-driven lender. These types of lenders include community development financial institutions (CDFIs) and work with entrepreneurs by providing hands-on guidance from the initial application through the life of the loan. While the loan sizes tend to be smaller than those from banks, many entrepreneurs find the mentorship provided by mission-driven lenders to be invaluable. 

4. Online Lenders

Another option that has increased significantly in recent years is online lending. They come in a couple of different forms. One is private companies, such as Square and PayPal, that lend as either part of their larger offering or as businesses wholly designed for online lending. In addition, most financial institutions, including traditional banks, SBA-backed lenders, and CDFIs, offer online lending options. In either case, the application process and approval times are often faster and more convenient. However, many non-bank online lenders charge higher interest rates or high penalties and fees so be sure to educate yourself on the repayment terms before taking on any loans.

5. Crowdfunding

Another funding source you may have seen filmmakers use to get their projects greenlit is crowdfunding, and it can potentially work for your business too. Crowdfunding involves asking a large number of people to fund your business, typically through small donations, and they receive a small gift like branded merchandise rather than financial return. Most crowdfunding platforms are low risk because they don't require business owners to repay the money to the donors. The one downside is that a crowdfunding campaign is also time-intensive to put together so it is important to make sure it is a good fit for your business. 

Whether you use personal savings or a crowdfunding campaign, there are many funding options for your business. The most important factor in choosing one is determining which is the best for your financial security, business' growth, and mental health.


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