The stock market is having a strong day on Wednesday, fueled by a rise and stabilization in oil prices and the government's $484 billion stimulus package that is expected to pass as early as tomorrow. As of 1:30 p.m. EDT, both the Dow Jones Industrial Average and S&P 500 index were higher by about 2%.
There isn't any major company-specific news out of either fintech. Instead, the major driving force here is likely the massive stimulus bill that's making its way through Congress.
Here's why. The stimulus adds $310 billion to the Paycheck Protection Program (PPP), which ran out of money last week and is designed to provide forgivable loans to small businesses to help meet payroll and other expenses. PayPal and Square are both approved to make PPP loans, and $60 billion of the funding is specifically designated for smaller lenders in the program.
Perhaps more significantly than these companies being able to make loans is what the stimulus means for small businesses. Combined with the original $350 billion allocated to PPP loans in the CARES Act, this makes $660 billion in funding that will help merchants -- especially smaller ones -- make it through the COVID-19 pandemic.
Small businesses are the bread and butter of both of these fintech companies. PayPal's core business is processing payments for online merchants, while Square is more focused on brick-and-mortar retailers. In both cases, the additional PPP funding should help the financial security of the companies' customers and therefore should help avoid a massive drop in revenue when the economy starts to reopen.