Since we began processing Payroll Protection Program (PPP)
applications on April 29, 2020, as of June 10, Square Capital has
facilitated more than $820 million in PPP loans, providing access
to a financial lifeline to more than 76,000 small businesses.
That’s an average loan of less than $11,000, with 97% of our loans
falling under $50,000 – the SBA’s smallest tier for
measurement.
Compared to the Square Capital program’s 2019 business loan
origination volume, which was $2.3 billion, we did 4.5 months worth
of volume in just 6 weeks. The demand for stimulus funds from
Square sellers was immense, and overall we received more than
140,000 applications for more than $2 billion in loans. 60% of our
PPP borrowers had never before received a loan through Square
Capital, enabling us to expand reach and serve new businesses.
“While our lending business has served Main Street small
businesses for years, we knew that as our sellers and their
communities were facing deep economic uncertainty, we could play a
meaningful role in disbursing stimulus funds and aimed to become
one of the country’s top facilitators of microloans,” said Jackie
Reses, Square Capital Lead. “In mere weeks, we were able to create
an application that made it simple for business owners to complete
the PPP application, knowing many Square sellers handle all
elements of their business – including financial operations –
themselves. The impact shows in our numbers: the average SBA loan
for all of PPP is $113,0001, while PPP loans through Square Capital
are 1/10th that size.”
By employer type – Majority of borrowers were non-employer
businesses
80% of American businesses are non-employer firms2. For Square
Capital, non-employer firms received twice the number of loans as
employer firms, but half the dollar volume when compared to
employer firms (50,000 loans for a total of $290 million, compared
to 26,000 loans for $530 million).
“Being a sole proprietor is always challenging, but coronavirus
amplified that exponentially, as it meant you were one person alone
trying to figure out how to adapt and survive,” said seller Carolyn
Hart, CMT, who owns her San Francisco massage practice. “Despite
being unable to work, I wasn’t planning to apply for a PPP loan
because I was too afraid of being rejected. Square Capital made a
point to make their application transparent, streamlined, and
accessible to businesses like mine, and it was a true lifesaver.
I’m so relieved my 28-year business will survive the pandemic.”
By geography – Loans distributed to small businesses in all
50 states
Square Capital’s ability to provide small businesses financial
access regardless of geographic boundaries was reinforced through
the PPP process. 47% of loans went to businesses in zip codes with
an average household income of less than $50,000. This gives us an
approximate measure of socioeconomic status of borrowers, and
indicates loans reached communities that are often at higher risk
to be adversely impacted by economic conditions.
Additionally, we had loans going to all 50 states, and saw near
even distribution across urban, suburban, and rural regions.
- 34% of loans went to rural businesses, with an average loan
size of $9,400
- 26% went to suburban businesses, with an average loan size of
$10,700
- 39% went to urban businesses, with an average loan size of
$11,900
At a state-by-state level, Square Capital had an outsized impact
in some of the smallest and most remote states – Hawaii and Alaska
both received above-average numbers of loans per capita. The top
states for loans per capita are:
- Oregon - 4.30 loans per 10,000 people
- Hawaii - 4.16
- Florida - 3.99
- D.C. - 3.72
- Alaska - 3.48
States with some of the highest costs of living saw many of the
highest average loan sums; Massachusetts led the charge with an
average loan of $14,200, 29% higher than Square Capital’s national
average. Here’s the complete list of top states for highest average
loan size:
- Massachusetts - $14,200
- California - $13,900
- New York - $13,700
- D.C. - $13,700
- New Jersey - $13,600
“In any geography, it’s difficult for small businesses to
sustain themselves,” noted Reses. “In expensive regions, it can be
even more so as the cost of labor and rent add up with outsized
proportions. Enabling independent businesses across the country to
access stimulus funds to stay afloat while pausing or adapting
their businesses to the reality of the pandemic became our top
priority. These comparably small loan amounts made a massive
difference to businesses.”
By industry – Beauty & Personal Care, Food & Drink
businesses among top borrowers
The top industries by loan volume and loan size dollars show the
varying shelter-in-place realities for businesses. By total loans,
beauty and personal care businesses held the top position. With
independent beauty and personal care professionals’ in-person
services paused due to the pandemic, these loans provided a
financial lifeline to sustain their livelihoods until their
businesses could reopen.
- Beauty & Personal Care: 18,700 borrowers, average loan
$5,600
- Professional Services: 14,800 borrowers, average loan
$11,700
- Healthcare & Fitness: 9,500 borrowers, average loan
$11,100
Meanwhile, food & drink businesses – such as restaurants and
coffee shops – led in average loan size, with their figure of
$19,800 nearly doubling the average loan of the entire Square
Capital program borrower population. Restaurants’ demand for
dollars enabled them to provide continuity to their employee
populations, despite many having to modify their businesses to
comply with social distancing rules and regulations.
- Food & Drink: Average loan of $19,800, total loans $170
million
- Home & Repair: Average loan of $14,500, total loans $72
million
- Retail: Average loan of $11,700, total loans $86 million
Impact of the Square ecosystem – rehiring through Square
Payroll
Square Payroll customers completed and submitted PPP
applications through Square Capital at 8x the rate of non-Square
Payroll customers. Because we already had their average monthly
payroll data, we were able to autofill parts of their application
to reduce time and error risk, leading to a smooth application
experience powered by our ecosystem.
Having hiring and employment insights through Square Payroll
also allows us to see the after-effects and realtime impact of PPP
loans on business operations. The cohort of Square Payroll
customers receiving PPP loans had fewer than 5 employees on
average. After receiving funds, we saw indicators of economic
resiliency among Square Payroll sellers:
- A 70% increase in businesses running payroll post-loan
- The number of employees paid by businesses that received PPP
funds nearly doubled after loans were disbursed
- Among businesses that never stopped running payroll, the
average number of employees paid increased 34% after receiving the
funds
Continuing financial innovation for small businesses
Small businesses’ early challenges accessing PPP funds has only
reinforced the need for banking products that empower them, and
signals a shift in what small businesses will expect – and deserve
to see – from their financial institutions. We saw nearly half of
applicants used a mobile device to apply for PPP (43% mobile, 57%
desktop) – signaling that on-the-go business owners believe their
banking should be tech-enabled and available anywhere.
After receiving conditional approval in March for our ILC,
Square Financial Services, and with the learnings of PPP under our
belt, we’re at work building a new bank for small businesses. We’ve
heard loud and clear that they want a bank that will prioritize
them through thick and thin, and seen a broad need for more
accessible financial services. We look forward to continuing to
serve our Square sellers, and small businesses everywhere, as we
push forward.
About Square
Square, Inc. (NYSE: SQ) revolutionized payments in 2009 with
Square Reader, making it possible for anyone to accept card
payments using a smartphone or tablet. Today, we build tools to
empower businesses and individuals to participate in the economy.
Sellers use Square to reach buyers online and in-person, manage
their business, 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 UK.
Square Capital, LLC is a wholly owned subsidiary of Square,
Inc., d/b/a Square Capital of California, LLC in FL, GA, MT, and
NY. All loans are issued by Celtic Bank, a Utah-Chartered
Industrial Bank, Member FDIC, located in Salt Lake City, UT. The
individual authorized to act on behalf of the business must be a
U.S. citizen or permanent resident and at least 18 years old. Valid
U.S. bank account and Social Security number or Individual Taxpayer
Identification Number are required. All loans are subject to credit
approval and the terms of the SBA Paycheck Protection Program.
1 Source: SBA.
https://www.sba.gov/sites/default/files/2020-06/PPP_Report_Public_200606%20FINAL_-508.pdf
2 Source: SBA.
https://www.sba.gov/sites/default/files/advocacy/Nonemployer-Fact-Sheet.pdf
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200615005116/en/
Media Contact: press@squareup.com
Block (NYSE:SQ)
Historical Stock Chart
From Aug 2024 to Sep 2024
Block (NYSE:SQ)
Historical Stock Chart
From Sep 2023 to Sep 2024