Borrowers, Bankers Hit Glitches in SBA Loan Kickoff
The federal government’s $350 billion small business loan program, part of the $2 trillion stimulus package designed to address the economic fallout of the COVID-19 pandemic, got off to a rocky start Friday, with some of the nation’s biggest lenders saying they weren’t yet able to process loan applications.
Wells Fargo announced Sunday it was bowing out of the Payroll Protection Program (PPP). The bank on Saturday accepted loan applications but on Sunday it said customers and other businesses that hadn’t yet applied would have to go elsewhere.
Wells Fargo said it would target businesses with fewer than 50 employees and non-profits among the applications it had already received. The bank’s abrupt departure from PPP could shut out some of its small business customers, which is significant because the bank arranged more small business loans than any other lender in the U.S. last year.
Most U.S. banks are processing loans only for existing clients.
The PPP offers 1 percent interest loans to business with fewer than 500 workers. Borrowers who don’t lay off workers in the next eight weeks will have their loans forgiven, as well as the interest. On Monday morning, the Small Business Administration said more than 100,000 loans totaling $30 billion had been approved and funded under the program.
PPP is designed to limit the swelling number of workers applying for unemployment, with Congress aiming to distribute as much as $349 billion in aid to small businesses.
A number of the nation’s largest lenders on Friday delayed taking loan applications. Many bankers blamed the hitch on the U.S. Treasury Department not finalizing rules until less than a day before the kickoff.
As of Sunday evening, Citibank was still not accepting loan applications. But the bank said that once it began processing loans it planned to accept applications until June 30.
Members can find the PPP loan application at FarmEquip.org/COVID-19.
The Association has revised its online resource page that offers members tools and information in response to the pandemic. It is organized to offer state-specific information and a condensed menu of resources that includes templates and forms, answers to frequently asked questions, and the latest on federal regulations.
Sources: CBS, Wall Street Journal