PPP in review: Square Capital has facilitated more than $ 820 million in stimulus loans to more than 76,000 small businesses in all 50 states
SAN FRANCISCO – (COMMERCIAL THREAD) – Since we started processing Payroll Protection Program (PPP) applications on April 29, 2020, to June 10, Square Capital has facilitated over $ 820 million in PPP loans, providing access to a buoy bailout for more than 76,000 small businesses. This is an average loan of less than $ 11,000, with 97% of our loans being less than $ 50,000 – the SBA’s smallest level of measurement.
Compared to Square Capital’s 2019 business loan origination volume of $ 2.3 billion, we achieved 4.5 months in just 6 weeks. The demand for stimulus funds from Square sellers was immense, and overall we received over 140,000 requests for over $ 2 billion in loans. 60% of our PPP borrowers had never received a loan before through Square Capital, allowing us to expand our reach and serve new businesses.
“While our lending business has served small businesses on Main Street for years, we knew that with our vendors and their communities facing deep economic uncertainty, we could play a significant role in disbursing stimulus funds and targeting to become one of the main facilitators of the country. microcredits, ”said Jackie Reses, Head of Square Capital. “In just a matter of weeks, we were able to create an app that makes it easy for business owners to complete the PPP application, knowing that many Square sellers handle all aspects of their business on their own, including financial operations. The impact can be seen in our numbers: the average SBA loan for all P3s is $ 113,0001, while PPP loans through Square Capital are 1 / 10th of that size. ”
By type of employer – The majority of borrowers were businesses without an employer
80% of U.S. businesses are employers without an employer2. For Square Capital, businesses without an employer received twice as many loans as businesses with an employer, but half the dollar volume compared to businesses with an employer (50,000 loans for a total of $ 290 million, compared to 26,000 loans for $ 530 million).
“Being a sole proprietor is always a challenge, but the coronavirus amplified that exponentially, because it meant you were one person trying to figure out how to adapt and survive,” said salesperson Carolyn Hart, CMT, who has its massage practice in San Francisco. “Although unable to work, I had no intention of applying for a P3 loan because I was too afraid of being rejected. Square Capital has made a point of making its application transparent, streamlined and accessible to companies like mine, and it has been a real lifeline. I am so relieved that my 28 year old company will survive the pandemic. ”
By geography – Loans distributed to small businesses in all 50 states
Square Capital’s ability to provide financial access to small businesses regardless of geographic boundaries has been enhanced by the PPP process. 47% of the loans went to businesses in zip codes with an average household income of less than $ 50,000. This gives us a rough measure of the socio-economic status of borrowers and indicates that the loans have been made to communities which are often more at risk of being affected by economic conditions.
In addition, we provided loans to all 50 states and saw an almost equal distribution between urban, suburban and rural areas.
34% of loans went to rural businesses, with an average loan of $ 9,400
26% went to suburban businesses, with an average loan of $ 10,700
39% went to urban businesses, with an average loan of $ 11,900
At the state-by-state level, Square Capital has had a disproportionate impact in some of the smallest and most remote states – Hawaii and Alaska both received above-average loan numbers per capita. The main states for per capita loans are:
Oregon – 4.30 loans per 10,000 people
Hawaii – 4.16
Florida – 3.99
DC – 3.72
Alaska – 3.48
States with some of the highest costs of living have seen many of the highest average loan amounts; Massachusetts led the charge with an average loan of $ 14,200, 29% more than Square Capital’s national average. Here is the full list of the top states for the highest average loan amount:
Massachusetts – $ 14,200
California – $ 13,900
New York – $ 13,700
DC – $ 13,700
New Jersey – $ 13,600
“Regardless of geography, it’s hard for small businesses to sustain themselves,” noted Reses. “In expensive regions, this can be even more so as the cost of labor and rent add up in disproportionate proportions. Enabling independent businesses across the country to access stimulus funds to stay afloat while suspending or adapting their businesses to the reality of the pandemic has become our top priority. These comparatively low loan amounts have made a huge difference to businesses. ”
By industry: Beauty and personal care, food and beverage companies among top borrowers
The major industries in terms of loan volume and loan amounts show the different realities of on-site housing for businesses. In terms of total loans, beauty and personal care companies took the top spot. With in-person services for independent beauty and personal care professionals on hold due to the pandemic, these loans have provided a financial lifeline to maintain their livelihoods until their businesses can reopen.
Beauty and Personal Care: 18,700 borrowers, average loan of $ 5,600
Professional services: 14,800 borrowers, average loan of $ 11,700
Health and Fitness: 9,500 borrowers, average loan $ 11,100
Meanwhile, food and beverage companies – such as restaurants and cafes – led the way in average loan size, with their figure at $ 19,800, nearly doubling the average loan size for the entire country. population of Square Capital program borrowers. Restaurants’ demand for dollars has allowed them to ensure continuity in their employee populations, although many have had to modify their businesses to comply with social distancing rules and regulations.
Food and beverages: average loan of $ 19,800, total loans of $ 170 million
Home and repair: average loan of $ 14,500, total loans of $ 72 million
Retail: Average loan $ 11,700, total loans $ 86 million
Impact of the Square ecosystem – rehiring through Square Payroll
Square Payroll customers completed and submitted PPP requests through Square Capital at 8 times the rate of non-Square Payroll customers. Since we already had their average monthly payroll data, we were able to auto-populate parts of their app to reduce time and risk of error, resulting in a smooth app experience fueled by our ecosystem.
Having information on hiring and employment through Square Payroll also allows us to see the legacy and real-time impact of PPP loans on business operations. The cohort of Square Payroll customers with PPP loans had an average of less than 5 employees. After receiving funds, we saw indicators of economic resilience among Square Payroll sellers:
A 70% increase in companies handling post-loan payroll
The number of employees paid by companies that received PPP funds almost doubled after the loans were disbursed
Among companies that have never stopped managing payroll, the average number of paid employees increased by 34% after receiving the funds
Continuous financial innovation for small businesses
The early challenges for small businesses to access PPP funds only reinforced the need for banking products that empower them and signal a change in what small businesses expect – and deserve to see – from their financial institutions. We found that almost half of applicants used a mobile device to apply for PPP (43% mobile, 57% desktop) – reporting that business owners on the go believe their banking services should be tech-enabled and available anywhere.
After receiving conditional approval in March for our ILC, Square Financial Services, and with the PPP learnings under our belt, we are working on building a new bank for small businesses. We heard loud and clear that they wanted a bank that would prioritize them through thick and thin, and we saw a great need for more accessible financial services. We look forward to continuing to serve our Square sellers and small businesses around the world as we move forward.
Square, Inc. (NYSE: SQ) revolutionized payments in 2009 with Square Reader, allowing anyone to accept card payments using a smartphone or tablet. Today, we are creating tools to enable businesses and individuals to participate in the economy. Sellers use Square to reach buyers online and in person, run their businesses, and access financing. And individuals use Cash App to spend, send, store, and invest money. Square has offices in the United States, Canada, Japan, Australia, Ireland, and the United Kingdom.
Square Capital, LLC is a wholly owned subsidiary of Square, Inc., d / b / a Square Capital of California, LLC in Florida, GA, MT and NY. All loans are issued by Celtic Bank, an FDIC member Utah chartered industrial bank located in Salt Lake City, UT. The person authorized to act on behalf of the company must be a U.S. citizen or permanent resident and be at least 18 years of age. A valid US bank account and Social Security number or individual tax ID number are required. All loans are subject to credit approval and the terms of the SBA’s Paycheck Protection Program.