The Trump administration’s $ 349 billion emergency paycheck protection program to help small businesses cover their wage costs was scheduled to roll out on Friday, April 3, with banks accepting applications from businesses affected by the coronavirus. Among the major US banks, Bank of America and JPMorgan were able to facilitate the process, but not without obstacles. The final round panel discusses.
JEN ROGERS: Today is a big day if you are a small business owner and have been waiting for relief from Washington. People have been waiting all week to be able to file applications to try to get loans to cover their payroll, to meet their rent requirements. It therefore opened its doors today.
It’s … it works in some banks, it seems. The other banks don’t seem ready. Dan Roberts, you called and talked to people. I’ve spoken to some small business owners looking to apply for it, and their banks aren’t offering it yet. So who is and who is not?
DAN ROBERTS: Yeah, Jen. Look, this is a $ 349 billion aid package, isn’t it? And I think before delving into the details, I thought that comment from last night was very revealing. And by the way, the kind of faucet was supposed to open at midnight last night. This was when the banks were supposed to be able to start processing applications for these loans.
So it was the CBA, or Consumer Bankers Association, which said in a statement last night: “After receiving advice on how to implement this $ 349 billion program literally hours before it begins, we let’s ask everyone to be patient as the banks move heaven and earth to put a system in place. ” I mean, that’s what we already heard yesterday in all areas, is that the banks are saying that we don’t even have all the information yet to start processing these loan applications. So we can kind of … it depends on who you want to blame. It’s sort of a separate discussion.
But this morning, not all of the major banks were fully operational. No one was really up and running this morning yet, and again they were supposed to be up and running by midnight. Finally, B of A, Bank of America, was sort of the first to set up their web portal to apply for these loans. But B of A was quickly criticized twice.
First of all, they had outages at the site, which makes sense. B of A received something like 15,000 applications in just the first hour. But also, there were a lot of angry tweets from people saying, well, I just got rejected on the B of A request page, because I’m not an existing B of A loan client.
And Brian Cheung from Yahoo Finance also spoke to a small business owner who said she had a loan from B of A in the past and then paid it off, and, because it was paid off in the past. , she is not a current customer and was rejected. So it was a problem. These were people who were refused loans. It’s not meant to be that they only give loans to their existing customers.
And then technically it’s a problem. I mean, Chase took until 2:00 p.m. today to get going. Citi is still not operational. None of the big banks in Silicon Valley would be operational. They’re just slammed with apps.
By 2:00 p.m., B of A was out and said they had received some 58,000 loan applications. So it’s an assault, it’s a flood, which of course makes sense. And you can blame whoever you want here for lack of advice, but the banks weren’t prepared for this flood today.
JEN ROGERS: And in defense of Bank of America, I mean, they said they wanted to do it the same way with loans because then they would have information about people – already have these connections – as a way to get them out faster than they could. . At this point it looks like the President has changed his mind about Bank of America, saying that they’ve been amazing, that they’ve stepped in here. Small Business Administration claiming to have approximately over $ 2.2 billion in loans.
It appears from a small business owner I spoke to who was planning to apply, that the application itself has changed. Like, what people thought they were going to do a few hours ago this morning, and then the requirements change, it’s just one kind of frustration after another on a small level.
DAN ROBERTS: I think all of this is true. And let’s also mention, it’s not easy to just put it all together. I mean, in defense of all the different parties involved, it’s all going so fast. I mean, that part of the $ 2.3 trillion package, that part that’s just for small businesses, has only been worked out in the last couple of days. And then the SBA changed the guidelines just last night.
A big, key change that’s happened in the last 48 hours, I think the banks said, well, wait a minute, this is really going to hurt us financially. So Mnuchin kind of threw a bone at them by raising the borrower interest rate by half a percentage to 1%. So now the interest rate is 1%. It will help the banks a bit.
But yes, the advice was changing at the last minute like last night. And as you mentioned, with B of A, yes it makes sense that B of A wants to focus on customers where it [? already has ?] information. But it’s worth mentioning, on the other hand, that Chase, who finally set up his portal around 2:00 p.m. today, didn’t say the same. Chase doesn’t just give loans to its existing customers.
So maybe it’s also a problem of a lack of consistency in the overall way each bank is going to handle this differently. And then this morning on our show “The First Trade”, we spoke to the CEO of a small bank who said, look, in our case, we’re trying to give all the loans we can. And for us, it’s not about interest rates, and we just want to help small businesses. Now, of course, that’s fine to say at this point, but we’ll see later on how generous being with loan approvals is hurting this little bank we spoke to. But the point is, there is a lack of consistency right now. But for small businesses, they just want to get that money.
JEN ROGERS: And I think one of the other frustrating things for small business owners is the idea that it’s not about endless amounts of money, so people want to apply right away. And they fear that if they don’t integrate it right away, they will be left out in one way or another. So I think that’s causing some concern among small business owners about trying to get it right away. But at least it looks like the banks are – you know, obviously they say they’re all trying to fix this problem. And I hope next week will be a very different story.