CT bank halts small-dollar loan program due to high demand
04 Avril, 2020, 05:51 | Auteur: Auguste Feret
Small Business Association Administrator SBA Jovita Carranza says small businesses play a vital role in the US economy and explains the paycheck protection program and loans that will be distributed to those who need them.
The process can be confusing for these small businesses needing the cash lifeline, especially since the federal government told them applications could start today.
A BBVA spokesperson said the bank is "committed to helping our clients and communities through this situation, especially our small business clients, as they are the lifeblood of the USA economy". BofA said its gotten 28,000 applications so far. Although JPMorgan Chase initially said it will not accept applications on Friday, citing lack of guidance from the Treasury Department, the nation's largest bank reversed course Friday afternoon and said it will begin processing applications.
Ted Stein, who operates a small software business in West Virginia, filled out an online form Thursday through PNC Bank, saying he was interested in applying.
"It was nearly comical, but heartbreaking".
"I'm very concerned that the systems that are perfectly adequate for normal operations just won't be able to handle this", said Karen Mills, a former SBA administrator.
"Small lenders, community banks, regional lenders, non-bank lenders like myself, and even the biggest banks are not going to have the capacity to make these loans and keep it on their balance sheet for any period of time", Hurn said.
The $349 billion Payroll Protection Program, part of the $2 trillion stimulus package that President Trump signed into law last week, is created to get cash in the hands of struggling small businesses and incentivize them to keep staff on payroll, or re-hire workers who have already been laid off. Small businesses can apply for loans up to $2 million, with an advance of up to $10,000. The loans will be fully or partially forgiven if businesses show that the money was used to retain or rehire employees and pay some overhead expenses through June 30. Treasury Secretary Steven Mnuchin wrote in a tweet.
"This is certainly a huge undertaking", Nelson said.
Brock Blake, CEO of small business loan marketplace Lendio, said about 70 percent of its lending partners will participate in the program.
U.S. businesses with fewer than 500 employees account for 44% of U.S. GDP and support 61 million jobs, according to Moody's. Banks large and small will have to process these loans as quickly as possible in order to get their customers a slice of the program.
The banks have moved employees into new departments - a logistical challenge given many employees are working remotely - just to potentially keep up with the flood of applications. Small businesses that are losing revenue because of the pandemic, and some businesses with more than 500 employees in certain industries also are eligible. Millions of applications are expected on Friday.
"The breadth of the program and the speed to the market is so quick, you've got to understand that's expected", Parent said.
Khanna also said he hopes the potential flexibility for startups due to the coronavirus pandemic - which has crippled businesses across the country - will turn into a more long-term change.
But lenders were still waiting for guidance - which only arrived Thursday night - on what documentation they needed from borrowers and other guidelines to process the loans, said Julie Huston, chief executive of lender Immito LLC in Denver and chairwoman of The National Association of Government Guaranteed Lenders, a trade association of banks and finance companies that make SBA loans. Independent contractors and self-employed individuals can apply next Friday (April 10).
Like Knapp, Graves urges businesses to submit applications as soon as possible, even if that means filling out a PDF and emailing it to the bank today and, perhaps, filling out additional forms online next week.
"This program will burn through the $350 billion quickly so folks need to apply ASAP", he says. Every big restaurant and hotel chain is going to be going after this money.
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