1/n) This evening the @SBAgov released it's new lender application form which will enable non-bank (i.e. online/alternative) lenders to be eligible to make #PPP loans. There's been a lot of talk about these companies stepping in and providing capital. This is important... https://twitter.com/jaredhecht/status/1247368280966389761

2) Before I get into it, @marcorubio has once again done a great job highlighting areas to improve PPP. He has referenced fintech lenders before, especially @PayPal (which is a remarkably customer-friendly fintech SMB lender). https://twitter.com/marcorubio/status/1247290959970402311?s=20

3) These are companies like @Square, @QuickBooks, @stripe, @bluevinecapital, @FundingCircleUS, @OnDeckCapital and @KabbageInc. Some of them have massive install bases of US merchants (scale of millions), others have issued billions in loans to 10's - 100's of thousands of SMBS.

4) These lenders are FAST. They're built for speed. They have tons of data on their SMB customers and have the ability to process applications significantly faster than a traditional banking institution. Why?

5) Great digital experiences coupled with technology that works and customer service that is strictly oriented around helping SMBs get funded. This is a muscle they have all developed over the past decade, and they're in a different league than 99% of banks.

6) Now I am not saying these are better businesses than banks. But I am saying that they are better (i.e. faster, objectively better UX, etc.) at getting capital to SMBs than almost every single bank out there. Okay, so why is this a big deal?

7) Well, companies like PayPal, Square, QuickBooks and Stripe have MILLIONS of small business customers. They sit in the middle of their financial lives and data. They use this data to provide capital to them. Their customers trust them. Actually, their customers LOVE them.

8) These are companies that can rapidly deploy capital to their customers, and do so by spinning up an application process (I'm sure they already have this built) that leverages the pre-existing data they have on merchants and focuses on speed and customer service.

9) For online lenders like Bluevine, Funding Circle, ONDK, Kabbage, Fundbox, etc. - these companies play a pivotal role in the lending ecosystem. They service SMBs who either do not want to work with their banks for lending, or are ineligible for lending at their banks.

10) These companies collectively have provided 10's of billions in capital to hundreds of thousands of SMBs. Their customers work with them for long periods of time, and as much as everyone would like to say they compete with banks, they are actually more complementary.

11) These lenders can quickly deliver capital to their existing customer base. Most already have applications live (they're acting as Agents) or ready to go. They can also lend to SMBs whose banks are not participating in PPP...

12) ...or whose banks are not providing acceptable service levels. They provide SMBs CHOICE! And right now, that's critical as almost every institution is only focusing on their depository base if they are participating in PPP at all.

13) Remember, there are still tons of banks who are not doing PPP lending yet, or will not at all. And those that are are almost exclusively only lending to their depository customers. This locks a TON of SMBs out of the system and these fintech/online lenders will fill the void.

14) On a separate note...this is entirely hearsay, but on multiple occasions from people I trust in the industry, I have heard that banks have been lobbying against the SBA granting fintechs these licenses, which explains some of the delay here. One can easily understand why...

15) When these fintechs deliver, and I believe they will, customers will love them even more. The government will appreciate their contribution to saving small business, and it will become obvious that they should all be granted bank charters.

16) When that happens, they're no longer complementary to banks, they are straight-up competitors. And that scares the shit out of every bank. @Square is already opening a bank in 2021. If you use Square you're likely excited about this https://squareup.com/us/en/press/ilc-update

17) Anyways, hearsay, but the pieces fit. Net-net, the fact that fintechs can now apply to participate in PPP is a massive step in the right direction. And the second they're approved and lending, it will be an important win for small businesses in need of capital.