NEW YORK (AP) — Millions of American small businesses are expected to apply for a desperately needed rescue loan, a stern test for a banking industry that has had less than a week to prepare for the deluge.
Small businesses will be seeking loans from the USD349 billion Paycheck Protection Program, which was put in place to help them retain workers and pay bills during the coronavirus pandemic. The programme is being overseen by the Small Business Administration but banks are the ones who handle the application process.
The banking industry is trying to temper expectations about how many businesses will get the cash they need. Banks large and small will have to process these loans as quickly as possible in order to get their customers a slice of the programme.
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. Not only that, but thousands of their employees are either sick or quarantined because of the virus.
Already, one large lender to small businesses said it likely won’t be ready. On Thursday, JPMorgan Chase said it was still awaiting instructions from the SBA and the Treasury and, as a result, “will most likely not be able to start accepting applications on Friday”.
Others scrambled to get prepared.
“Wells Fargo is working as quickly as possible to be ready to assist small business customers as part of the Paycheck Protection Program,” said a spokeswoman for Wells Fargo, one of the largest small business lenders, Catherine Pulley.
The programme is part of the USD2 trillion relief package signed into law last week, which was billed as a way to help local businesses that often form the fabric of communities stay afloat.
The programme will give businesses low-interest loans of about 2.5 times their average monthly payroll.