By Philip Rosenstein

Law360 (April 13, 2020, 8:22 PM EDT) -- Fintech companies have received a green light to participate in the $349 billion Paycheck Protection Program launched as part of the $2 trillion pandemic relief package, with Square Capital announcing Monday that it has been approved as a PPP lender.

Fellow fintech companies Intuit Inc. and PayPal Holdings Inc. said on Friday that they were also approved as nonbank lenders and will begin accepting loan applications through the Paycheck Protection Program, also known as PPP. The announcements come on the heels of questions around the ability of nonbank fintech companies to participate in the program.

Launched on April 3 through the Small Business Administration, PPP aims to throw a lifeline to the millions of small businesses that are in danger of laying off workers and going under while large swaths of the economy are shut down for the COVID-19 pandemic. The program calls for enlisting private-sector lenders to make up to $349 billion in low-interest, forgivable loans to small businesses for use in covering payroll and other expenses.

"Square Capital has received U.S. Treasury and SBA approval to be a PPP lender, and we will start rolling out our PPP loan applications this week," Jackie Reses, who leads Square Capital, said in a statement that was also tweeted on Monday. "We continue to work with our partner Celtic Bank as they have existing expertise as a leading SBA lender."

"We will notify sellers when their application is available via Square Dashboard, starting with employers whose application data we can verify automatically," she said. "We expect to expand access to more small businesses soon."

Intuit and PayPal confirmed to Law360 that they were given approval to begin accepting applications for federal relief through PPP on Friday. Fintech company Kabbage said that it had partnered with a bank last week to help process PPP applications starting on April 7.

"Validation of payroll information is necessary to complete the PPP application," Luke Voiles, vice president and business leader of QuickBooks Capital, the Intuit subsidiary approved to participate in PPP, said in a statement Friday. "For QuickBooks Payroll customers, the customers' data is already in the QuickBooks system. As a result, we are well positioned to help expedite the loan application process for this group. One in 12 American workers are paid through our payroll systems, which makes this an impactful place to start."

From the program's inception, questions were raised about the ability of nonbank fintech companies to offer loans through PPP. Authorized by the $2 trillion federal coronavirus relief legislation enacted in late March, the Paycheck Protection Program has been dogged by uncertainty as Treasury and SBA officials have rushed to get it up and running at full speed.

Some of the concerns around the involvement of nonbank fintech companies in PPP stemmed from rulemaking issued April 2. As part of the rulemaking, officials essentially preapproved banks to make PPP loans so long as they're in good financial condition and not in trouble with a federal regulator. But nonbanks were required to meet certain other standards, including requirements surrounding compliance with the Bank Secrecy Act, a federal anti-money laundering law.

As the week began, lenders in the program had processed about $205 billion in loans, according to the American Bankers Association.

Moorari Shah, a partner at Buckley LLP, told Law360 that despite fintechs being eager to participate in PPP and having the technology "to expedite loan origination and forgiveness under the PPP," incumbent lenders have had a "several-day head start."

"Fintechs have also had to modify their loan documentation, underwriting and online flows to allow for the unique loan parameters and certifications that the SBA requires for PPP," Shah said. "In some cases, this has required building alternative data feeds than the ones some fintechs typically use to underwrite and originate loans."

"Even still, the fintechs have been up to the challenge even before the CARES Act became law, and very much want to be part of the solution," Shah added. "At the moment though, they're still trying to close the gap that the incumbent SBA lenders had out of the gate."

Nonetheless, Shah sees strong potential for fintechs to be an important part of PPP.

"The main advantage right now of having fintechs involved is that there's still a lot of money to be doled out, and fintechs could help to increase capacity, especially if more money is appropriated for the program as is expected," he said.

--Additional reporting by Jon Hill. Editing by John Campbell.

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