NEW YORK (Reuters) – Square Capital, a unit of payments company Square Inc, said on Monday it has issued more than $820 million worth of loans to small businesses to help them weather the economic shutdown brought on by the coronavirus pandemic.
Square, founded and led by Twitter Inc Chief Executive Officer Jack Dorsey, said it issued loans worth less than $11,000 on average to more than 76,000 small businesses.
The loans are part of the U.S. government’s $660 billion emergency loan program, also known as the Paycheck Protection Program. It allows businesses to apply for government-backed loans that can be forgiven if at least 75% is spent on payroll costs.
Square Capital said it received applications for more than $2 billion in loans for the program, and 47% of loans went to businesses in neighbourhoods with an average household income of less than $50,000.
Beauty and personal care businesses were the biggest borrowers by industry, Square Capital said.
Due in part to the speed at which the emergency loan program was introduced, it has been criticised for a poor roll-out including technological glitches, and lending to bigger companies that had cash on hand and were not most in need of funding.
The novel coronavirus, which causes the sometimes fatal COVID-19 respiratory disease, has pushed the global economy into its worst recession since the 1930s, as governments around the world shut businesses in March and ordered citizens to stay home to prevent the virus from spreading.
The world economy has started re-opening in recent weeks although many businesses are still struggling.
(Reporting by Koh Gui Qing; Editing by Daniel Wallis)