Trump officials are struggling to get coronavirus aid loans out the door

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The Trump administration is struggling to unravel the kinks of a coronavirus small business lending program after a chaotic start on Friday.

Some banks say they don’t have access to Small Business Administration (SBA) platforms, while industry leaders say there are unanswered questions about how to apply for credit and how to use it.

On Monday, the SBA’s loan processing platform crashed and went down for hours, preventing lenders from processing loans, Bloomberg News reported. The system was ready for use again on Monday afternoon.

Restaurants and startups are among those who have had difficulty finding their way around the program.

“We told our restaurant owners when the bill was passed to set up their files and file calls to their personal bank so they could get started right away. Banks are still investigating whether it makes sense for them to participate in this government program or if they have any unanswered questions before stepping in, “Sean Kennedy, executive vice president of public affairs for the National Restaurant Association, told The Hill.

The restaurant industry is hardest hit as tens of millions of Americans are told to stay home.

The Treasury Department and the SBA last week launched applications for the $ 349 billion Paycheck Protection Program (PPP), which aims to provide loans to small businesses to cover payroll and other essential expenses during the coronavirus pandemic.

Banks and credit unions employees review, approve, and process the applications, which as of Sunday morning comprised 78,000 loan applications for $ 22 billion.

“SBA officials stressed that they weighed security and speed in providing access to the systems that allow banks to provide PPP loans,” the American Bankers Association said after meeting the Treasury Secretary Steven MnuchinSteven MnuchinThe Hill’s Morning Report – Presented by Alibaba – Biden engages in frantic discussions about Democratic spending and other Treasury and SBA officials on Sunday.

The day before, the restaurant association had received a call from Treasury officials promising to do everything in their power to work with the industry to find solutions to the loan program problems.

“When we look at the SBA loan programs that are just coming out, we know it’s a band-aid that is getting smaller against a wound that is getting bigger,” Kennedy said. “There are still many unanswered questions about how certain small restaurant chains can benefit from this because of their organization.”

He added that restaurants are having issues with the rules of when to take the loan, when to use the money, and details about the percentage of the loan that can be spent on non-salary expenses.

It’s a mixed bag for restaurant franchises.

“If you are a smaller franchisee and your brand is on the SBA franchise registry and you find a bank that participates in PPP, you are getting paid and the program is working as intended,” said Matt Haller, Senior Vice President of International Franchise, Association of Government Relations and Public Affairs.

Other franchises have already been denied credit.

“If you are a franchisee and your brand is not on the franchise register, government bureaucrats will reject you even if your bank accepts the loan application. It is clear discrimination based solely on the company under a brand and not as an independent company, ”said Haller.

The Treasury Department and the SBA did not respond to requests for comment.

Startups backed by venture capital (VC) firms are struggling, particularly whether they are eligible for credit and whether their workforce needs to include the staff of their venture capital investor.

“At the beginning, major problems were the bank participation – mostly solved – and the limitation of loans to existing customers – in progress. Open questions about eligibility for VC-backed startups based on membership rules, ”said John Lettieri, CEO of Economic Innovation Group, in an email to The Hill.

Wells Fargo took loan applications Monday and the bank said it would focus on small businesses with fewer than 50 employees. The program is aimed at companies with fewer than 500 employees.

“We strive to help our customers in these unprecedented and challenging times, but we are limited in our ability to serve as many customers as we want under the PPP. While all businesses are affected by this crisis, small businesses with fewer than 50 employees and nonprofits often have fewer resources. We are therefore focusing our efforts on these groups under the Paycheck Protection Program, ”said Charlie Scharf, CEO of Wells Fargo, in a statement on Sunday.

Mnuchin announced Bank of America approval of loans on Friday to allay concerns about the program’s launch. The bank announced Monday that it had received more than 178,000 applications valued at nearly $ 33 billion, roughly 9.4 percent of the program’s total.

Hundreds of thousands of small businesses are expected to compete for the loan pool and the administration has emphasized that they are working to get the loans to the companies as soon as possible.

“All the signs confirm that the money is being allocated very quickly, but many companies are unsure when they will actually receive it,” said Lettieri.

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