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, Intuit QuickBooks approved to hand out emergency funds to small businesses in coronavirus program - CNBC

Posted: 10 Apr 2020 12:00 AM PDT

A sign is posted outside of the PayPal headquarters in San Jose, California.

Justin Sullivan | Getty Images

After weeks of lobbying, fintech companies are officially allowed to take part in the U.S. government's emergency lending program. 

PayPal and Intuit QuickBooks announced Friday evening that they were approved by the Small Business Administration to take part in the Paycheck Protection Program. The emergency government loans are meant to help small businesses survive the economic slowdown caused by the coronavirus outbreak. 

"This is a race to save jobs in the present and for the future," PayPal CEO Dan Schulman 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."

In addition to acting as a direct lender, Intuit QuickBooks said it would process payroll information, which small businesses need to provide to lenders in order to get approved.

The U.S. government had asked banks to help it distribute at least $350 billion in loans to small businesses as part of the $2 trillion coronavirus stimulus bill.

For weeks, tech-focused lenders had been pushing to be included in that stimulus plan. Financial Innovation Now — an industry group representing Square, PayPal, Intuit, Stripe and other non-bank finance companies — sent a letter to Congress in March asking that their members be included in any emergency funding.

"Small businesses are not well served by traditional financial institutions, nor will existing federal small business loan programs deliver funds soon enough," the letter reads. "Any federal small business loan program must leverage digital advances in the marketplace to ensure that stimulus can reach those business most in need."

Tech companies, including Square and Amazon, have become popular options for small businesses to get access to capital. PayPal said it has provided access to more than 900,000 loans and cash advances, and access to more than $15 billion in funding to more than 305,000 small businesses. 

PayPal Enters Installment Loan Business Targeting Fintechs Affirm And Afterpay - Forbes

Posted: 31 Aug 2020 12:00 AM PDT

Point of sale financing—the modern layaway that lets you pay for a new TV or dress in four installments instead of putting it on your credit card—has been rising steeply in popularity over the past two years, and the pandemic is propelling it to new heights. Australian company Afterpay, whose entire business is staked on the scheme, has sailed from a market valuation of $1 billion in 2018 to $18 billion today. Eight-year-old San Francisco startup Affirm is rumored to be planning an IPO that could fetch $10 billion. Now PayPal PYPL is cramming into the space. Its new "Pay in 4" product will let you pay for any items that cost between $30 and $600 in four installments over six weeks.

Pay in 4's fees make it different from other "buy now, pay later" products. Afterpay charges retailers roughly 5% of each transaction to offer its financing feature. It doesn't charge interest to the consumer, but if you're late on a payment, you'll pay fees. Affirm also charges retailers transaction fees. But most of the time, it makes users pay interest of 10 - 30%, and it has no late fees. PayPal seems to be a lower-cost hybrid of the two. It won't charge interest to the consumer or an additional fee to the retailer, but if you're late on a payment, you'll pay a fee of up to $10. 

Serial entrepreneur Max Levchin started two of the three major players offering online point of sale financing in the U.S. He cofounded PayPal with Peter Thiel in 1999 and started Affirm in 2012. 

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PayPal can undercut the competition on fees because it already has a dominant, highly profitable payments network it can leverage. Eighty percent of the top 100 retailers in the U.S. let customers pay with PayPal, and nearly 70% of U.S. online buyers have PayPal accounts. PayPal charges retailers per-transaction fees of 2.9% plus $0.30, and in the second quarter, as Covid-19 made online purchases skyrocket, it saw record revenues of $5.3 billion and profits of $1.5 billion. Its stock has ballooned, adding $95 billion of market value over the past six months. In an economic environment where ecommerce is surging, "PayPal can grow 18-19% before it gets out of bed in the morning," says Lisa Ellis, an analyst at MoffettNathanson. 

Data from Afterpay and PayPal show that consumers spend more money—sometimes 20% more—when they're offered point of sale financing options. When PayPal launches Pay in 4 this fall, it will likely see transaction sizes rise, and since it already earns 2.9% on each transaction, its fee revenue will rise in tandem.

The online point of sale financing market has millions of American customers so far. Afterpay, which expanded to the U.S. in 2018, has 5.6 million users. Affirm also says it has 5.6 million. Stockholm-based Klarna, 9 million, and Minneapolis-based Sezzle has at least one million. 

Separate from Pay in 4, PayPal has been offering point of sale financing for more than a decade. It bought Baltimore startup Bill Me Later in 2008 and rebranded it as PayPal Credit in 2014. PayPal Credit lets consumers apply for a lump-sum line of credit and has millions of borrowers today. Like a credit card, it levies high interest rates of about 25% and requires monthly payments. These consumer loans can have a high risk of default, and PayPal doesn't own most of them—it offloads the U.S. loans to Synchrony Bank. (In 2018, Synchrony acquired PayPal's massive book of U.S. consumer loans for about $7 billion.)

This past spring, as the pandemic was spreading quickly and concerns spiked about consumers defaulting on loans, PayPal pumped the brakes on lending. "Like many installment lenders, they essentially halted extending loans in March or early April," MoffettNathanson's Ellis says. "Square SQ did the same." PayPal senior vice president Doug Bland says, "We took prudent, responsible action from a risk perspective." 

With Pay in 4, PayPal's renewed push into lending is an indication the company is getting more aggressive in a volatile economy where many consumers have fared better than expected so far. Unlike PayPal Credit, PayPal will house these new loans on its own balance sheet. Bland says, "We're incredibly comfortable in managing the credit risk of this."

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