JPMorgan Chase has temporarily stopped accepting small business loan applications outside the government’s paycheck protection program, the bank said on Wednesday.
Chase has been inundated with more than 375,000 applications for $ 40 billion in loans as part of the $ 350 billion small business rescue program, more than any other bank, its president said on Tuesday. Gordon Smith, to President Donald Trump.
A Chase spokesperson said the bank is now devoting all of its underwriting resources to small businesses to process these requests and had “temporarily suspended” the taking of other small business requests. The bank continues to process non-PPP requests already underway, she said, and will revisit the issue of new requests next week.
PPP loans are guaranteed by the Federal Small Business Administration. They cover up to 2.5 times the typical payroll of businesses with fewer than 500 people, which helps them continue to pay staff during forced closings during the coronavirus epidemic.
The total amount of the loans, up to $ 10 million each, will be canceled if recipients can demonstrate that they used the money for approved salaries and other expenses, making it by far the most attractive form of short-term financing for cash. businesses.
However, if small businesses have borrowing needs beyond the limits of the P3, or if they want to borrow for purposes beyond the wage bill, they should seek other facilities.
Joe Rosenberg, partner of the Grove North Ventures business incubator, had asked Chase for a loan of $ 250,000 to finance the production of N95 respirators, which had been in short supply since the epidemic.
He said he was told that the bank “does not make” any small business loans outside of the P3 program and that the office of the governor of New York, who agreed to finance the loan, was pointed out. production of essential equipment.
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Wells Fargo, which reopened P3 operations on Wednesday after the Fed temporarily accepted elevator a cap on his balance sheet said he was “as usual” for regular small business loans. Bank of America could not immediately say whether it had suspended regular small business loans in order to cope with the avalanche of demand.
Bank of America had more than 240,000 PPP requests for $ 40 billion Tuesday night, Wells Fargo said it had more than 170,000 requests before closing its requests program, saying the asset cap meant it couldn’t lend more.
Citigroup has not yet launched its program, and told customers on Wednesday that it “works as fast as possible”, while discouraging them from approaching call centers and branches where staff “have not more information at this time. ”
The PPP regime was beset by confusion and delays since its launch on Friday last week, despite the White House urging banks to disperse the money as quickly as possible. Congressional leaders discussed extending the $ 250 billion program.