The $350 billion federal program — called the Paycheck Protection Program — was a key part of the recently passed $2 trillion COVID-19 stimulus package. The Paycheck Protection Program is a relief plan designed to extend federally-backed loans that become grants if the money is used for payroll and other general operating expenses.
Despite major implementation issues, Treasury Secretary Steven Mnuchin tweeted late Thursday that the program was up and running with a link to the application guidelines.
But across the United States, at banks large and small, the program just isn’t up and running yet. And experts said it would take a week before the program is fully operational.
Wells Fargo said on its website Friday, “Financial institutions like ours continue to receive program implementation guidance from the SBA and the U.S. Treasury. Unfortunately, as a result, Wells Fargo will not be able to begin accepting applications on Friday, April 3. When we can accept applications, you will find a link to that application on this page, so check back often.
“The apps were released just over 12 hours ago, literally in the middle of the night,” a banking industry official said. “Some loans will be made today and we expect the system to be up and running by early next week. It’s important to remember that banks have been handed the user manual for a $350 billion program at 6:30 p.m. the day before it was launched.Expectations were unrealistic, but rest assured that the banks are doing everything humanly possible to get this system up and running and helping small businesses.
Two separate banking industry sources told ABC News on Friday that applications were not received for potential borrowers and lenders until 10:30 p.m. Thursday night.
Additionally, some new lenders are having trouble accessing the SBA application site called “E-Tran,” according to two industry sources.
A source said there are also security issues with the portal that are currently being addressed.
Although Bank of America President and CEO Brian Moynihan is touting his institution’s success in rolling out its program in record time — telling CNBC the bank accepted 10,000 applications Friday morning — a big anger was directed at online banking and by a powerful Senate committee chairman.
“BankofAmerica got bailed out with $45 billion from your taxes. But now I just heard about #smallbusiness with a BOA account and a 400k line of credit they paid. BOA declined the loan # PPP because they don’t have a credit account A ridiculous requirement that is nowhere in the law,” tweeted Small Business Administration Committee Chairman Marco Rubio, R-Fla, who played a key role in the creation of the new PPP program.
Moynihan told CNBC his bank prioritizes those who have an established lending relationship with Bank of America.
“We prioritize. We have a million borrowing customers that we’re trying to get through the system first. Then our second priority will be customers who have the basic operating account with us but are not borrowing anywhere,” Moynihan said. “For those who borrow from the other 4,000 banks in the country, we try to get them back to their bank.”
Still, small business owners who hold accounts with Bank of America but don’t have open lines of credit were surprised to find their loan applications had been denied Friday morning.
Patrick Slaughter, owner of a small law firm in Knoxville, Tennessee, says he has a business credit card and checks with Bank of America, but has never needed to apply for a business loan. With his loan application denied for now, Slaughter says he could be forced to lay off his employees within weeks.
“It’s an emotional thing for me. The truth is, I could probably retire and walk away. But I’ve got too many people who haven’t done anything wrong and were hoping for us to get this help from the government,” Slaughter mentioned.
Slaughter said Bank of America contacted him hours after he was initially told he didn’t qualify for a Paycheck Protection Program loan at this time with a conventional loan or credit card offer. credit.
“They’re deliberately denying us this Paycheck Protection Program opportunity so they can profit by selling their loans to us,” Slaughter said.
“We know that for these businesses, speed is key. We can move faster with our nearly one million small business borrowing customers. This is our near-term priority. As the administration has made clear , going to your current lending bank is the fastest route to completion,” said Bank of America spokesman Ball Haldin.
Late Friday, Bank of America said loans would soon be available for those without a loan relationship. A source familiar with the matter says it could happen within days.
A Bank of America official expressed frustration that the bank is apparently being targeted for turning down customers who don’t have open lines of credit, given that the bank is one of the few actively processing applications. As of Friday afternoon, the bank said it has already helped more than 58,000 customers with SBA loans.
Lindsey Johnson, CEO of Weezie, a Georgia-based online linens retailer, said she spent the week mulling over the CARES Act, preparing all of her financial information, and staying up late. in the night to wait for the application. go live.
“Nobody ever mentioned the stipulation of having a loan relationship,” she said. Johnson has 28 employees she was able to keep on the payroll, but she said the situation was “very wait-and-see.”
“I feel like it was like an oversight. I hope Bank of America changes their requirements. I hope they do. It’s in their interest to keep their customers. If you can’t going to your bank on time like that is like, where else are we supposed to go?”
Consumer Bankers Association President and CEO Richard Hunt advised patience on Friday, saying in a statement: “Having just received guidance outlining how to implement a $349 billion program literally hours before ’til it starts we ask everyone to be patient as the banks move heaven and earth to set up and operate a system to help America’s small businesses and the millions of men and women who work there.
But that message was incongruous with the statements of administration officials.
Just before noon Friday, Secretary Mnuchin tweeted: “UPDATE #PPPloan now over $875,000,000 processed nearly all through community banks! Major banks are accepting applications and will submit them shortly. @SBAgov @USTreasury.
And some insisted that any problems with the Paycheck Protection Program were minor.
“I think that program is ready,” National Economic Council Chairman Larry Kudlow told Fox News. “They always have glitches at the start. It’s a huge undertaking, but at the end of the day, these are secured loans and they will be forgiven if you cover your payroll and other expenses. You have eight weeks to do so. I think it’s a great opportunity, a 1% interest rate. Again, the US government guarantees these loans, let me also say that people who want to apply should act quickly.
The Treasury Department did not respond to a request for comment.
Taylor Dunn of ABC News contributed to this report.
This report was featured on the Monday, April 6, 2020 episode of “Start Here,” ABC News’ daily news podcast.
“Start Here” offers a simple overview of the best stories of the day in 20 minutes. Listen for free every day of the week on Apple Podcasts, Google Podcasts, Spotify, the ABC News app, or wherever you get your podcasts.
