A little more info from Schwab about this from their SLP [share lending program] page.
Notice: The principal reason to borrow a security is to facilitate a short sale. Not all securities and account types are eligible for the SLFP program.
Any dividends and other distributions paid on securities that you have lent to Schwab will be paid to Schwab. Schwab will pass on to you any cash dividends and distributions to the full extent you would have been entitled had you not lent such securities to Schwab.
Schwab will deposit such cash dividends and distributions into your account on the same day as Schwab receives the cash payment. Such payment by Schwab may not be entitled to the same tax treatment as may have been applied to the receipt of a dividend. Schwab is not required to compensate you for any differential tax treatment between dividends and payments in lieu of dividends.
This information is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, Schwab recommends consultation with a qualified tax advisor, CPA, financial planner, or investment manager.
Participation in the program is based on enrollment. Share price and interest rates may fluctuate based on market conditions, which will impact potential earnings. Interest rates used to calculate earnings are subject to change without prior notice.
Instructions to Invest Cash Collateral in Bank Sweep Feature
When the lending transaction takes place, your securities will be removed from your account and placed into your supplemental account. In return, you will receive cash as collateral to secure the amount of your loan. This cash is intended to protect you in the unlikely event that the borrower of the securities fails to return them. We will maintain cash in your supplemental account that is at least equal to 100 percent of the market value of the borrowed securities.