Topline: The Small Business Administration has released guidelines for its paycheck protection program – a key part of the economic stimulus package that allocates $ 349 billion to small businesses to access repayable payroll and overhead loans – hours before launch. American banks have warned that they will not be ready to lend.
- Treasury Secretary Steven Mnuchin tweeted advice to lenders at 7:15 p.m. AND:
- The program will offer loans of up to $ 10 million at 1% interest to businesses and nonprofits with fewer than 500 workers so they can cover two months of pay and overhead.
- If the borrower retains workers and does not reduce their wages, the government will cancel most or all of the loan and reimburse the bank lenders.
- The application period for the program begins after midnight Thursday, and Mnuchin doubled the schedule at a press conference in the afternoon, saying he will be “operational tomorrow.”
- In the week after President Trump’s signing of the bill, banks flooded with customer calls have received little advice from the government and are now indicating that they may not be ready to start lending.
- “They are not ready at all, they are desperately waiting for advice on how to proceed,” said Ami Kassar, CEO of the small business loan consultancy MultiFunding. CNBC. “I think it’s going to be a mess for weeks. “
- JPMorgan Chase emailed clients Thursday evening with news that he would “probably not be able to start accepting applications on Friday, April 3 [it] hoped “, according to one CNBC report.
- The National Association of Government Guaranteed Lenders – a business group – had to postpone a training call for 1,500 lenders on Thursday because it did not have the information it needed from the SBA, the New york times reports.
- Brock Blake, CEO of Lendio Small Business Loan Market, tweeted, “Wow. What a mess! “
Crucial quote: “It’s absolute chaos,” James Brower, partner at New York-based accounting firm Marks Paneth, told NBC News. “Business owners are asking for this money. They want to pay their people. And banks are struggling to keep pace: “We are now hearing from bankers that they may not want to participate in the program because the law does not contain many details, but the telephone lines are scrambled with the owners begging for loan applications, “said Brower.
Key context: The historic stimulus package – worth more than $ 2 trillion – also includes a $ 500 billion business rescue fund, increased unemployment benefits and aid to hospitals. Under the bill, most American adults will also receive a direct payment of $ 1,200 each and $ 500 per child (couples will receive $ 2,400), subject to income restrictions. Treasury Secretary Steven Mnuchin said that eligible people can expect to receive the money within three weeks if the Internal Revenue Service has information on their bank account and can deposit funds directly. (Others who get paper checks will probably have to wait longer.)