Louisiana bankers say federal loan program not finalized

  • Louisiana bankers say federal loan program not finalized

Louisiana bankers say federal loan program not finalized

The Paycheck Protection Program is implemented by the Small Business Administration with support from the Department of the Treasury. Although the SBA will be able to audit lenders and borrowers later, it will fall primarily to private bankers to make decisions about who should receive taxpayer-backed loans.

In the Paycheck Protection Program, loan applications and supporting documentation must be submitted to an approved lender by June 30.

The US government doubled the interest rate on $350 billion in loans available to small businesses from 0.5% to 1% on Thursday after small banks reportedly complained they couldn't afford to lend at such a low rate.

Most of the big banks like JP Morgan Chase, Wells Fargo, and Citigroup did not have programs online-only Bank of America did-early Friday morning, so this means community banks nationwide are the ones stepping up to push the money out to small businesses affected by the coronavirus crisis.

"This is an unprecedented expansion of SBA lending that will take some time before it's fully functioning", said Rob Nichols, president of the American Bankers Association.

"You get the money, you'll get it the same day, you use this to pay your workers".

"We were able to provide financial relief for many customers over a very short a short period of time and we will continue to work closely with them in other ways", said Liberty Bank CEO David Glidden.

The Paycheck Protection Program is a forgivable loan created to provide a direct incentive for small businesses to keep their workers on the payroll.

Still, Mnuchin affirmed the agency's commitment to getting the loans out quickly on Thursday.

"This is all coming at us so fast and we're just trying to keep up", Blankenship said. "It's been like drinking from a firehouse".

"That's why we are working to make it as easy as possible for even the smallest businesses to apply for additional funding with the launch of the Michigan Paycheck Protection Program website".

The administration said PPP loans will be awarded on a first come first serve basis with funding caps in place. Neither the government nor lenders will charge small businesses any fees for these loans.

Since this money is going directly to small businesses across the country, and since it's mostly flowing through small community banks it is significantly boosting communities and main street across the country rather than Wall Street. "And they have a second option in the Economic Injury Disaster Loans from the SBA". Every big restaurant and hotel chain is going to be going after this money.

The sources said they left those discussions reassured that the administration had understood their concerns, and believed they had broadly agreed a workable plan.

"Just the scale of requests is going to cause the system to break down".

The program is more complex than it seems and may pose too much risk for some banks, industry officials say. "It's not going to last", said Ron Feldman, chief development officer at ApplePie Capital, which has been helping businesses get ready to apply.

Businesses can defer their payroll taxes, the 6.2 percent levy that funds Social Security, until the end of 2020 and then pay them to the government in two installments, at the end of 2021 and at the end of 2022.

Liberty Bank's small-dollar emergency loan program is one of numerous low- or no-interest credit products banks have offered to people struggling financially because of the coronavirus pandemic. The law allows for a maximum interest rate of 4 percent.

He said he views the small-business loan effort as a troubled but necessary endeavor.