Tech giants offer new lifelines to businesses

• The availability of these options became crucial during the pandemic, especially if services businesses couldn't get all or any financial support through the Paycheck Protection Program.
• Square Loans, for example, facilitated more than $9 billion in small business and Paycheck Protection Program loans to more than 460,000 Square sellers, with an average loan size of $6,750.

Driving the news: Delivery platform DoorDash last week became the latest tech giant to start offering banking services in the form of cash advances. 

How it works: DoorDash offers varying amounts to its partner restaurants depending on sales history, instead of a credit check. 

• Restaurants can get the money in as little as 1-2 days, the company says, and repayment is based on a one-time fee and percentage of daily sales.

The big picture: Small businesses, 99.9% of all U.S. firms, have come to rely more on digital services to reach customers or to accept payment. 

• As a result, platforms like Square (now part of Block), Stripe, Toast and Shopify, have real-time access to data on how a business is doing — unlike traditional banks.

Flashback: Taking advantage of this entrenched relationship, Square last year started offering savings and checking accounts to businesses on top of cash advance services which began officially in 2014 and transitioned to loans in 2015.

• Restaurant management platform Toast started offering loans in 2019, as did payment processor Stripe.
• E-commerce platform Shopify introduced its merchant cash advance program in 2016.

By the numbers: Average loans from regional and large national banks are around $146,000 and $593,000, respectively.

• Square small business loans range from $300 to $250,000 while Shopify Capital says its funding amounts can range from $200 to $2 million.
• Parafin, the fintech startup that underwrites the risk of DoorDash's services, says its advances have typically been below $50,000 during DoorDash's soft launch.

What they're saying: Advances can increase loyalty to the tech platform itself—increasing the likelihood that DoorDash partner restaurants won't head to a competitor like Grubhub, Vineet Goel, Parafin co-founder, tells Axios.

• Separately, Toast's senior vice president of Fintech and Employee/Payroll Nick DeLeonardis tells Axios that there is substantial demand for faster access to capital in the restaurant industry because applying for typical bank loans can take weeks or months.
• Restaurants are also often rejected due to common challenges within the industry, like thin profit margins and seasonality, he added.

What to watch: Potential regulatory scrutiny.

• Big Tech has already faced calls to be monitored for its ability to impact financial services.