A rescue lending program for small businesses reportedly got off to a rocky start Friday, and could fall short of what companies need to stay afloat during the coronavirus pandemic.
The Treasury Department and Small Business Administration rolled out the program for applications for small businesses to get forgivable loans for payroll and other basic expenses.
But banks, credit unions and other lenders worry the $349 billion program lacks clear guidelines for the crush of loan applications that could overwhelm the system while leaving some firms in the lurch, The Hill reported.
“The guidance was released hours before this program is set to begin and there are still a number of unanswered questions which will very likely complicate quick fulfillment of these critical loans,” Jim Nussle, president and CEO of the Credit Union National Association, a trade group for credit unions, told The Hill.
The amount allocated for the Paycheck Protection Program is more than 12 times the $28.1 billion in loans originated by the SBA in all of 2019 -- and could overwhelm agency staffers, The Hill noted.
Bank of America drew fire from critics like Sen.Marco Rubio, R-Fla., who authored the PPP program, for restricting loans to pre-existing business lending customers to help lessen the flood of applicants.
“Let me just say this as nicely as I possibly can: Please don’t be a bunch of jerks, OK? When you needed the country to help you, they did,” Rubio said in a Twitter video, referring to the 2008 bank bailout. “Now, the country needs you to help them, and we’re paying you to do it.”
The Hill, citing a U.S. Chamber of Commerce poll released Friday, reported 24% of small businesses say they will close permanently within two months or less due to the economic fallout of the coronavirus pandemic.
“There’s going to have to be some patience all around. I’m really impressed with how quickly America’s financial institutions have responded in kind of stepping up and making sure that they’re helping small businesses across the country,” Neil Bradley, Chamber chief policy officer told The Hill.
But others were skeptical.
“You have an absolute economic crisis right now where businesses are closing, people are being laid off, and there's no end in sight and there's no relief in sight,” Julie Verratti, a former SBA policy adviser and co-founder of Maryland-based Denizens Brewing Co., told The Hill.
“These programs that have been created — they're well-intentioned, they may be slightly helpful, but it's like trying to put a Band-Aid on top of somebody's getting over a limb chopped off,” she added.
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