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One week into the rollout of the coronavirus relief program that promised quick cash for small businesses, community lenders have continued to process the bulk of the loan applications while some of the nation’s biggest banks have been criticized for moving too slowly.
The $2.2 trillion CARES Act passed at the end of March established the $349 billion Paycheck Protection Program, which is designed to get cash in the hands of small businesses devastated by the coronavirus pandemic and incentivize them to keep staff on payroll, or rehire workers who have already been laid off.
As of April 3, small business owners could apply for funding, and independent contractors on Friday. The program opened to self-employed individuals on April 10. But many owners have run into problems obtaining the loans: According to a study released by an industry trade group on Thursday, 70 percent of small business owners have applied for the loan -- but just 70 percent were successful.
"Some of the big banks that had no problem in taking billions of dollars of free money as bailout in 2008 are now the biggest banks that are resistant to helping small businesses so that should tell you something," Joseph Amato, district director for the Small Business Administration, said in a webinar posted online this week.
According to a senior Small Business Administration official, 570,000 loans worth $145 billion had been processed as of Friday at 8 a.m. ET. More than 4,100 lending institutions processed the loans, dominated by community banks.
National banks that are participating in the program include: Bank of America, Capital One, Chase, Citibank, U.S. Bank and Wells Fargo. But many have rebuffed potential applicants who do not have prior ties with the bank.
Companies with no more than 500 employees may borrow up to 2.5 times their payroll, or up to $10 million, which can be used for payroll and other expenses, like insurance premiums, mortgages, rent or utilities through June 30. The loans, which are guaranteed by the federal government, will be fully forgiven if 75 percent of the money goes toward keeping workers employed, according to the SBA.
Treasury Secretary Steven Mnuchin on Wednesday asked Congress to approve an additional $250 billion to replenish the loan program. On Thursday, however, Senate Democrats blocked an attempt by Majority Leader Mitch McConnell to unanimously pass the legislation, pushing for changes to the small business aid program and more emergency funding for hospitals and states. The Senate adjourned until Monday.
This is the status of the Paycheck Protection Program at big banks:
Bank of America: To apply for a loan through Bank of America, small business owners must:
- Have a small business checking account and lending relationship as of Feb. 15, 2020
- Have a small business checking account open no later than Feb. 15, 2020 and do not have a business credit or borrowing relationship with another bank
Capital One: According to Capital One’s website, the bank is currently “testing the effectiveness” of its PPP submission process with a small number of existing business banking customers. When the online application process opens, business owners must have an established business banking relationship with Capital One as of Feb. 15 in order to apply.
Chase: The bank, the largest in the nation, is accepting applications for customers who have an existing Chase Business checking account as of Feb. 15.
“There was overwhelming interest, and we are working person by person to get the information we need to input (by hand) the information into the SBA system,” a spokesperson for JPMorgan Chase told FOX Business earlier in the week. “We have thousands of bankers working with our small business customers to help them get the funds they need.”
Citibank: Citibank is proactively contacting Citi Small Business Banking customers and letting them know when the bank is ready to take applications.
U.S. Bank: The bank is currently accepting applications for both existing and new customers, according to its website.
Wells Fargo: The bank said on Sunday that it had hit its $10 billion lending cap and was no longer accepting applications. However, the Federal Reserve said this week it will raise that limit.