April 3 (UPI) — Bank of America opened its online small business portal on Friday, the first institution to do so under the federal government’s new $350 billion coronavirus relief program.
The program, part of the $2 trillion CARES Act, offers loans of up to $10 million at 1 percent interest to companies and non-profits with fewer than 500 workers to cover up to two months of payroll and overhead expenses.
The Small Business Administration issued guidance for its Paycheck Protection Program, an element of the federal package that allows small businesses to access payroll and overhead loans, late Thursday evening. A message from Treasury Secretary Steven Mnuchin Friday said banks would “go live soon this morning.”
Bank of America’s application process was activated on its website early Friday.
The government will forgive most or the entire loan, and repay bank lenders, if the borrower retains workers and maintains wages. Lenders could begin processing loan applications for small businesses and sole proprietors on Friday, the Treasury Department said, and independent contractors or otherwise self-employed individuals can apply beginning April 10.
Other banks, including Wells Fargo and JPMorgan Chase, announced Friday they weren’t yet prepared to begin processing applications.
“Financial institutions like ours are still awaiting guidance from the SBA and the U.S. Treasury,” Chase Bank said in an email to business customers.” As a result, Chase will most likely not be able to start accepting applications on Friday, April 3rd, as we had hoped.”
Some lenders hoped the loan process would begin Monday. They received guidance on how to process applications in a 31-page SBA handbook that was posted online late Thursday. In the week since President Donald Trump signed the legislation, banks have been overwhelmed by customer inquiries with little guidance from federal officials.
The abrupt creation of the program has also caused some confusion among lenders and businesses.
“Having just received guidance outlining how to implement a $349 billion program literally hours before it starts, we would ask for everyone to be patient,” said Richard Hunt of the Consumer Bankers Association.
“It’s utter chaos,” James Brower at accounting firm Marks Paneth added. “Business owners are clamoring for this money. They want to pay their people.
“We’re now hearing from bankers that they may not want to get into the program because the law doesn’t have a whole lot of specifics in it, yet the phone lines are jammed with business owners begging for loan applications.”