PayPal Holdings Inc., Square Inc. and Intuit Inc., three California technology companies, all wanted a piece of the federal government’s $350 billion loan program, which was designed to keep businesses in the black during the COVID-19 pandemic.
Although the Federal Reserve Board signaled its willingness to allow non-banks to participate in the Paycheck Protection Program (PPP) as part of the $2.2 trillion stimulus program passed by Congress last month, The Wall Street Journal reported that technology firms got off to a late start, at which point most of the cash was already gone.
The SBA’s PPP, part of the $2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act passed by Congress last month, provides forgivable loans to small businesses to help them keep workers on the job.
FinTech companies have dramatically expanded the reach of traditional lenders, the paper wrote. For example, PayPal has more than 10 million small business customers, while Intuit’s QuickBooks accounting software counts six million users.
The inclusion of such firms in the SBA loan initiative came amid crushing demand that exhausted the funds in less than a week.
It didn’t help that the SBA’s online loan platform couldn’t handle the lending software the companies used. Some of the data required on the application had to be provided manually, the WSJ reported.
“It’s kind of like they built a maglev train and had to reverse-engineer it into a handcar, because that’s the track they’ve been given,” said Brian Peters, executive director of Financial Innovation Now, an industry association whose members include Intuit Inc., PayPal and Square.
Luke Voiles, vice president and business leader of Intuit’s lending arm, QuickBooks Capital, told the paper they are doing their best. “But the timelines are tight and the demand is high,” he said.