Wells Fargo, others miss debut of rescue for small firms
Small businesses had mixed results Friday trying to apply for loans on the first day of an unprecedented federal relief program, with some banks including Wells Fargo & Co. saying they weren’t ready as lenders across the country grappled with lack of detailed guidelines from the government.
JMorgan Chase & Co. started taking applications Friday afternoon after warning clients Thursday night it was still awaiting guidance and may not be ready the following day. Bank of America Corp. is accepting applications online but only from clients “with a business lending and a business deposit relationship” at the bank.
Friday was the first day that U.S. small businesses hit by the fallout from the coronavirus pandemic could start applying for loans under a $349 billion program included in a $2 trillion stimulus package aimed at shoring up an economy.
U.S. Treasury Secretary Steven Mnuchin tweeted early Friday that large banks were “expected to go live soon this morning” and that he received his first report that community banks had started processing loans.
As of 11 a.m. New York time, 1,926 loans were originated totaling almost $757 million from 245 lenders, including Bank of America and community banks, according to a person familiar with matter.
The roll-out has been plagued by uncertainty, partly because of its magnitude and the urgency to get money to financially distressed small business owners before they’re forced to shut down permanently. After the government announced that the program would launch Friday with potentially millions of applications that could be processed quickly — even the same day — lenders said they lacked enough guidance.
First applicants reported widely different experiences. Some got error messages when trying to apply online, another has been trying since 4 a.m. in the morning, in vain, while two Bank of America small-business clients said they got through quickly and smoothly.
Wells Fargo was not accepting applications as of Friday morning, according to its website. The bank is working “as quickly as possible to be ready to assist small business customers,” spokesperson Kate Pulley said via email.
The nation’s credit unions early Friday were still seeking guidance on how they can participate. The National Association of Federally-Insured Credit Unions had yet to hear of any of its members having extended one of the SBA loans through 12:30 p.m., said Carrie Hunt, executive vice president of government affairs.
Some smaller banks also said they’re weren’t ready until they got more guidance about processing the loans from Treasury and the Small Business Administration, the agency in charge of the program. Fountainhead Commercial Capital, a national, non-bank lender that specializes in SBA loans, won’t be participating on Friday because the guidance so far is still “insufficient to most in the lending community,” said Chris Hurn, founder and chief executive.
“We truly hope that SBA will provide the necessary guidance we need very shortly, so we can begin processing loan applications, perhaps in a matter of hours thereafter,” Hurn said in a statement.
The initiative, called the Paycheck Protection Program, is meant to help small businesses keep workers on payrolls by offering loans of as much as $10 million with the portion used for payroll costs, mortgage interest, rent and utility payments for two months forgivable if firms retain and rehire employees. The number of Americans applying for unemployment benefits surged on Thursday and reached about 10 million over the last two weeks.
Wahid Nassar, who runs a restaurant in the Highlands, New Jersey, said he tried going online Friday morning to apply for the loan through his lender, Bank of America, but repeatedly got error messages.
But Joseph Colangelo, the chief executive officer of Boxcar Inc., a Chatham, New Jersey-based startup whose app offers parking and bus service, had better luck. He said he found the application online, and since he was already logged into the Bank of America website, it took him only 10 minutes to complete. The site said the bank would be in touch with him if it needed further information, he said.