On Tuesday, the U.S. Treasury said it plans to be able to fund the loans by today, but lenders are anxious they won't have enough capital to fund the demand and are asking how they'll be able to replenish capital - and how quickly.
Late Thursday evening, Cynthia Blankenship, corporate president of Bank of the West, said she was frantically reviewing the new rules. We want to hear about your experience. The program will provide much-needed relief to millions of small businesses so they can keep their workers employed. But in today's emergency environment they could deploy that much in a single day. Others like JPMorgan Chase said they wouldn't accept applications on Friday, citing lack of guidance from the Treasury Department.
Lt. Gov. Garlin Gilchrist and former Lt. Gov. Brian Calley, the current Small Business Association of MI president, have launched a new website to provide businesses with key resources to assist with the PPP application and loan processes to ensure the greatest amount of federal funding is able to be used by small businesses for economic relief throughout the state, according to an April 3 news release.
"You think it's chaotic now?"
The government help includes grants and low-interest loans to help the businesses pay their employees as well rent and utilities. Critics fear that only those applicants with the legal and financial expertise - that being large businesses and corporations - will be able to maximize the program's benefits.
Lenders are also concerned about the small amount of interest they'll be able to earn from the PPP loans: 1 percent with maturity at two years. Then, Tuesday, the Trump administration set the rates at 0.5%. Lobbyists are also pushing the Small Business Administration to interpret the law generously to help sectors devastated by mandatory business closures and stay-at-home orders, possibly making the aid available to worldwide fast food and lodging giants and allowing individual owners to get around a $10 million cap on loans.
According to Jovitza Carranza, administrator of the Small Business Administration, roughly 2,300 loans have been processed so far.
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. If you've let them go, you have eight weeks plus overhead. "A $100,000 loan and a $1 million dollar loan can cost a bank the same amount of money to originate".
The $5.9 billion-asset bank began accepting applications for the loans, which are interest-free and deferred for up to six months after closing, on Monday.
Shortly after noon, Treasury Secretary Steven T. Mnuchin tweeted that more than $875 million in loans had been processed "almost all from community banks".
Loans from the PPP will be awarded on a first come, first served basis with funding caps in place.
"This is an unprecedented expansion of SBA lending that will take some time before it's fully functioning", said Rob Nichols, president of the American Bankers Association.
That could make it hard for banks to meet the demand of PPP loans.
"This is a great opportunity to support MI small businesses during this hard time", said Bob Doyle, MICPA President & CEO.
You should consult with your local lender as to whether it is participating.
"What is SBA going to do, if anything, in overseeing these lenders?"
In the Paycheck Protection Program, loan applications and supporting documentation must be submitted to an approved lender by June 30.
The International Franchise Association argued in a letter to the SBA that would allow the program "to achieve its intended outcome and have maximum impact".
Earlier this week the Treasury posted a practice application for borrowers to download so they could "begin preparing" and "see the information that will be requested".