Square’s head of lending thinks the PPP still needs more changes to help the smallest businesses

Many small businesses and sole proprietors are still struggling to reopen and rehire employees as states reopen across the country, and people like Jackie Reses, who heads up PPP loans as head of Square Capital, wonder if the extended 24-week time frame to use funds for the program may not be enough.

“I think over the long term, even though forgiveness was made easier with the 24 weeks of time to count, I still hope that’s enough time for small businesses,” Reses said at the CB Insights Tech Conference on Tuesday. “I hope that forgiveness takes into account a technically broader set of use cases for what the capital is needed, and potentially even say, ‘You know what, this business, this tiny micro business—that plumber is still in business, and it might be slower, and he might need more than the 24 weeks, but we’re going to make loans that are really small forgivable because we see this is the lifeblood of the U.S. economy.'”

Reses has seen small businesses that use Square try to pivot amid the crisis, setting up online stores and using curbside pickup to make ends meet. But many Main Street businesses are still trying to manage issues with reopening, she said. “Small businesses are struggling to manage their cash flow. Typically small businesses have less than 28 days of cash flow in their savings,” Reses noted. “I still think the purpose [of the program] needs to appreciate that very small businesses, micro businesses across the United States, have been hurt in lots of different ways,” she said. And while many small businesses in various states are beginning to reopen (there’s been a “pretty significant” boost in activity in recent weeks, she said), there are still categories that are “weaker,” she said, noting health, beauty, and restaurant businesses among them.

Meanwhile, the businesses taking these PPP loans from fintechs are minute compared to many large companies that took loans from banks. Of the roughly 76,000 loans Square has facilitated through the PPP, the average loan size is just $11,000, and two-thirds have gone to sole proprietors, Reses says.

But in addition to possibly needing more than 24 weeks to use funds, Reses suggests the 11-page forgiveness application is too complicated for those smallest businesses, who likely don’t have accountants or CFOs to help. “It requires a math degree to understand,” she said.

To help ease some of the strain, Congress recently passed a bill that extended the time frame to use funds from eight to 24 weeks, and gave businesses more flexibility to use funds on non-payroll expenses. For some small businesses, getting full forgiveness of the loans should be a lot easier. “Assuming [your business is] functioning, it’s almost a foregone conclusion that you’ll have enough payroll to absorb the whole loan, and it basically should make the administration of processing loan forgiveness that much easier,” William McDevitt, a CPA based in the New York area, recently told Fortune.

But senators have also asked the Small Business Administration and Treasury to make the forgiveness process easier. In a letter on June 12, Senate Democrats called the application “burdensome, time-consuming, and costly for very small and underserved businesses.”

And as forgiveness looms for businesses, lenders from big banks like Bank of America to regional banks and fintechs like Square have even put their support behind a proposition to automatically have loans under $150,000 forgiven.

Meanwhile, Congress has indicated more help needs to go to businesses in more targeted ways.

And Reses, for one, said at the conference she hopes forgiveness will be more lenient. “‘This plumber is still back in business, or this tiny restaurant or the five-chair hair salon, or the coffee shop. If they’re still in business and they’re still serving our community, how do we make forgiveness easy?’ I’m hoping that happens,” she said.