The new round of funding for the Paycheck Protection Program, which includes $60 billion for smaller businesses, excludes non-depository banks from acting as lenders.
This time around Congress wants to make sure more money gets into the hands of smaller businesses by setting aside $60 billion for small lending institutions, which means regional banks and credit unions. Of that, $30 billion goes to depository institutions and credit unions with $10 billion to $50 billion in assets, while CDFIs, small depository institutions, and credit unis with under $10 billion in assets get $30 billion. But with the fintechs not named as designated lenders for the $60 billion, they say it's hurting their ability to get loans in the hands of its customers, many of which are among the smallest of businesses. The fintechs had lobbied Congress to set aside money for loans of $50,000 or less. It’s their sweet spot in terms of business customers and are the ones who are at the most risk of going under due to the pandemic. Funding Circle, Square Capital, PayPal, Intuit, and OnDeck were among the online lenders approved to participate in the first round. But with the money gone so quickly, they never got a chance to help. If they had a chance, they argue many tiny businesses would have received funding. Of the Funding Circle customers that applied for a PPP, 61% of the loans were for less than $50,000 while 94% were under $350,000. “This next round of PPP funds will be gone in 3-4 days and the smallest of small businesses will once again be left behind,” said Metcalf of Funding Circle. “Funding Circle US isn't giving up on them — we are ready to submit thousands of applications to the U.S. Small Business Administration."