Fintechs Seek U.S. Government Funds to Help Make Business Loans
(Bloomberg) -- Financial-technology firms including PayPal Holdings Inc. are lining up to help speed lending to small businesses during the coronavirus crisis -- and are pushing for a slice of emergency U.S. government funding.
Industry group Financial Innovation Now urged Congress in a letter to provide capital to online lenders including PayPal and Square Inc., and to permit the firms to disperse Small Businesses Administration loans. The group’s members also include Inuit Inc. and Stripe Inc.
“Any federal small-business loan program must leverage digital advances in the marketplace to ensure that stimulus can reach those business most in need,” Financial Innovation Now said in its letter. “Millions of truly small businesses, those most likely to fail in the coming weeks, will not be well-served by loan guarantees made available exclusively through financial institutions.”
Last week, President Donald Trump said the SBA would provide low-interest loans in affected states and asked Congress to boost funding for the program by $50 billion. Small businesses are losing 80% to 100% of their revenue amid the pandemic, according to another fintech trade group, Innovative Lending Platform Association.
“If they all go out of business, we can’t serve them in the future,” Scott Stewart, chief executive officer of ILPA, said in an interview. “We don’t care about making any money on this, but we want to keep them alive so that when this is all wrapped up we can be lending to them in the long term.”
Many small businesses have only 10 days of cash on hand or less, according to Sam Taussig, head of global policy at Kabbage Inc., an online lender. While SBA loans can take as long as 90 days, fintech firms are touting their ability to process loans in days or weeks.
A Square spokeswoman declined to comment. PayPal didn’t immediately respond to a request for comment.
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