SBA officials did not immediately provide comments for this story. Bank of America and Wells Fargo did not immediately return emails seeking comment.
Asked for comment, a JPMorgan Chase spokesperson referred to a conference call between Trump and industry executives Tuesday afternoon during which its co-president, Gordon Smith, said the bank had already taken 375,000 applications for $40 billion in loans.
Amato also said there are challenges with implementing the SBA’s disaster loans program, noting the small government agency is struggling to deal with more than 3 million loan applications it received in a matter of days.
He chided the big banks for taking bailout money in 2008, only to abandon small businesses at a time when funding is desperately needed.
“Some of the big banks … and this is just editorial … that had no problem taking billions of dollars of free money as bailout in 2008 are now the biggest banks that are resistant to helping small businesses,” Amato said.
He responded to widespread concerns that the largest U.S. banks are slow-walking their involvement in the Paycheck Protection Program, an important small businesses aid program. The SBA is trying to forge relationships with “non-bank lenders” because the major banks are limiting their involvement in the program, Amato said.
“We are trying to work quickly with national non-bank lenders and other sources that may make up the difference for the companies like, sadly, BofA, Wells Fargo and Chase that haven’t really stepped up to the plate to take on all the small businesses they can,” Amato said.
Addressing criticisms that the SBA did not release its regulatory documents quickly enough, Amato said: “So what they are saying is 'I don’t give … a hoot about the small businesses … what I care about is whether or not I have enough paperwork. It’s just crazy."
The comments came in an informational webinar posted online April 6. The Zoom teleconference was recorded and posted online by Faith Jones, a lawyer and small business consultant.
The Paycheck Protection Program uses federal money to back up private-sector bank loans at ultralow interest rates, and the opportunity to have the loan wiped away if business owners can keep paying their employees. The paycheck protection program relies on private lenders to set up the loans and hand out cash when it is needed. It is a critical piece of the recently-approved $2 trillion federal aid program known as the Cares Act.
The coronavirus has hit America’s small businesses like no other economic crisis in U.S. history, grinding America’s service-based economy to a halt as customers are ordered to stay at home. The economic tidal wave has been devastating for some of the country’s most vulnerable employers: Small retailers, bars and restaurants, entertainment venues and factory floors have shut their doors.
The crisis presents an unprecedented challenge for the Small Business Administration, a little-known federal agency best-known for underwriting bank loans. The agency is struggling to handle a historic influx of loan applications for its loan programs and is scrambling to write the rules for the $349 billion aid program while the program is already in motion.
The program got off to a rocky start when most big banks said they were not ready to begin processing applications last Friday when the Payment Protection Program launched.
Bank of America was alone among big banks to begin processing applications last Friday, earning it praise from President Trump. But the bank angered thousands of small business owners by initially only taking applications from customers it was already lending to.
Many other big banks have also limited applications to current business customers, causing angst among some small business owners that the money in the emergency fund would be exhausted before they found a lender.
Other banks, including JPMorgan Chase, said they needed more time to understand the program’s rules, which were released just hours before the program launched last week.
Citigroup, another large U.S. bank, is still not taking applications.
“Citi is working with the Small Business Administration to provide relief to Small Business owners. While we are working as quickly as we can, we are not yet able to accept applications for the Paycheck Protection Program,” the bank said.
Wells Fargo never formally began taking applications, but by Monday morning, said so many people had expressed preliminary interest that it had already reached the $10 billion cap it had set for loans under the program.
The banking industry has complained that the program has been plagued by confusing rules and unanswered questions. Even after borrowers’ applications are approved, money cannot be dispersed until the SBA finalizes the language they must include in the promissory notes. The SBA’s online system for inputting the applications has also been slow, banking industry officials say.
In the webinar this week, Amato criticized the major banks for turning down longtime customers at their moment of need.
“I can’t tell you how many phone calls I have where a doctor will call me, or a business owner will call me, and say ‘I’ve been with such and such bank for 25, 30, 40 years … and they say they aren’t taking my [Paycheck Protection Program] application because they’re not involved in the program,” he said. “That should tell you a lot about what that bank really is focused on but that’s just my editorializing.”
The Treasury Department and SBA have scrambled to address the industry concerns about the program’s structure, including raising the interest rate banks could charge to 1 percent from 0.5 percent. Big banks have been particularly concerned about the legal liability they could face if regulators later determined that the small businesses they lent to committed fraud. On Monday, the Treasury Department said banks could skip the typical vetting process for new loans when taking applications from new customers.
Former Federal Reserve chair Janet L. Yellen told House Democrats on a conference call earlier this week that banks would issue loans faster if it was clear they will not face lawsuits for fraud in the program. “Banks’ concern about liability could cause them to restrict the loans they initiate and engage in due diligence that could slow down payments,” Yellen told The Post.
Amato also responded to criticisms that the SBA’s regulatory process has not been clear enough. The SBA released its first regulation governing the program on Thursday evening, just hours before banks were expected to start offering loans. The rules have changed intermittently since Friday, and small business applicants say many of their questions remain unanswered.
“There is really no risk to the bank,” Amato said. “It just comes down to … the same banks that literally took billions of dollars with one page from [former Treasury Secretary Henry Paulson] are the ones saying the documentation isn’t clear enough for them.”
Amato also addressed delays to the agency’s disaster loans, a long-standing SBA loan program that is managed by the government rather than the banks. That program has received extra firepower through the Cares Act and is meant to distribute cash advances of up to $10,000 to provide businesses with short-term cash.
The program received more than 3 million applications in just three days, he said, and is struggling to deal with the backlog. The agency is bringing in an unspecified “third-party private resources” to help it meet the challenge, Amato said.
“They are muddling through it. If it were up to me I would write you a check tomorrow,” he told business owners. “But it is coming. … Be patient."
Dalton Bennett and Allie Caren contributed to this report.
Have a tip or story idea about how the government is handling the Cares Act and its response to economic fallout caused by the coronavirus? Send an email to caresacttips@washpost.com
https://news.google.com/__i/rss/rd/articles/CBMifWh0dHBzOi8vd3d3Lndhc2hpbmd0b25wb3N0LmNvbS9idXNpbmVzcy8yMDIwLzA0LzA4L3ZpZGVvLXNiYS1vZmZpY2lhbC1ibGFzdHMtYmlnLWJhbmtzLW92ZXItZmFpbHVyZS1xdWlja2x5LWRpc3RyaWJ1dGUtbG9hbnMv0gGMAWh0dHBzOi8vd3d3Lndhc2hpbmd0b25wb3N0LmNvbS9idXNpbmVzcy8yMDIwLzA0LzA4L3ZpZGVvLXNiYS1vZmZpY2lhbC1ibGFzdHMtYmlnLWJhbmtzLW92ZXItZmFpbHVyZS1xdWlja2x5LWRpc3RyaWJ1dGUtbG9hbnMvP291dHB1dFR5cGU9YW1w?oc=5
2020-04-08 14:43:52Z
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