PayPal has become one of the first non-bank institutions allowed to distribute loans to help small- to medium-sized businesses (SMBs) in response to the coronavirus pandemic, according to a press release.
The digital payments platform will now be able to give loans to SMBs that apply for loans under the Small Business Association’s (SBA’s) Paycheck Protection Program (PPP). The government allotted $350 billion for that purpose as part of the recent $2 trillion federal CARES Act passed in March.
This development follows interest from a number of non-traditional institutions and applications, including others like Square, to help distribute the loans during the pandemic's widespread financial uncertainty and troubles.
Dan Schulman, PayPal CEO, said in a press release that it is a "race" to help save jobs for the future. Schulman said he recognized how hard SMBs have been hit by the pandemic, and he said there is an urgent need for whatever help they could get to keep the lights on and pay employees during the shutdown.
The press release stated that PayPal has been working since 2013 to help SMBs, particularly ones owned by women or minorities, with loans and cash advances — so working with the SBA loans isn't a new thing for the company. The company boasts over 900,000 loans and cash advances, providing over $15 billion in funding to businesses in need.
According to a separate press release, PayPal has also begun waiving some fees, deferring repayments on business loans, extending the window through which businesses must respond to customer disputes and doubling the amount of cash back rewards on purchases through the end of this month.
The company said it hopes these measures will alleviate financial concerns as people have to stay apart and businesses are forced to keep their doors closed during the pandemic.
The loans for SMBs became available in early April, and the SBA has since been flooded with requests to the point of being overwhelmed, which could cause delays for applicants.