When the pandemic hit in March 2020, it became very challenging for small and medium-sized businesses to survive. As the virus spread and customers stayed home, many companies relied on government loans and grant programs to keep them afloat. One of them was the Payment Protection Program (PPP).
Originating from the Coronavirus Aid, Relief, and Economic Security (CARES), the PPP was designed to provide businesses with funds to pay up to 8 weeks of payroll costs, including benefits. These funds could also be used to pay rent, utilities, and mortgage interest.
The program has expired, but per the latest data from the US Small Business Administration, it doled out nearly 11.5 million loans worth more than $790 billion.
Due to its sheer volume of demand and lengthy procedures, getting a PPP loan approved from traditional banks was often slow and frustrating. Loans would sometimes even get rejected when certain banks like Chase and Wells, Fargo, and JP Morgan prioritized existing customers that had already gone through compliance processes. Those who couldn’t access or secure a PPP loan turned to FinTechs for support. One of them was Kabbage.