Business owners hit roadblocks while trying to apply for Small Business Administration (SBA) loans to help cover essential expenses like payroll during the coronavirus pandemic.
On Friday, Treasury Secretary Steven Mnuchin said on Twitter that the loans processed so far were “mostly all from community banks. Big banks taking in large amounts but not yet submitted in these numbers!”
But that claim doesn’t make sense, considering the challenges business owners are facing while trying to apply. Some of the largest banks in the country received criticism for their eligibility restrictions, and most haven’t even started accepting applications yet.
What is the loan program?
A freshly-passed $2.2 trillion relief package created an SBA program offering $349 billion in loans for businesses impacted by covid-19. Businesses with fewer than 500 employees, nonprofits, some veteran organizations and independent contractors are eligible for the loans through the Paycheck Protection Program.
The loans can be fully forgiven if the money goes toward certain basic expenses, including payroll, rent and utilities. Recipients also have incentive to retain workers. If a business sheds jobs or cuts salaries after receiving a loan, it won’t be fully forgiven.
How are the biggest banks responding to the program?
The SBA had planned to start receiving applications from small businesses on Friday. But guidelines for the program weren’t approved until the night before, leaving banks and business owners without crucial information about how loans would work.
Out of the 10 largest banks in the United States that serve small businesses, eight aren’t accepting applications yet, according to their websites.
Chase, the largest bank in the country, hasn’t started accepting applications. Neither have Wells Fargo, Citibank, PNC Bank or Truist Bank. Capital One, TD Bank and State Street Bank have no information at all about the program on their sites.
US Bank is initially emailing invitations to single-owner businesses, so nonprofits and other for-profit businesses can’t apply yet.
Lenders are also setting their own requirements, leaving some businesses ineligible for reasons that aren’t covered in the relief law. Bank of America, for instance, restricted applications to current customers who already had taken out a loan or a credit card.
Most of the top banks that posted eligibility requirements said they wouldn’t accept applications from businesses that weren’t already clients. US Bank, on the other hand, said it will accept applications from non-customers, but noted that “we encourage applicants to consider starting with a bank where they already do business.”
Contact Big If True editor Mollie Bryant at 405-990-0988 or bryant@bigiftrue.org. Follow her on Facebook and Twitter.
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