Post Mortem Studio Rental

Main Menu

  • Home
  • Aston villa
  • Holland and barrett
  • Pizza hut
  • Latest news
  • Capital

Post Mortem Studio Rental

Header Banner

Post Mortem Studio Rental

  • Home
  • Aston villa
  • Holland and barrett
  • Pizza hut
  • Latest news
  • Capital
Capital
Home›Capital›Big banks favor some clients under $ 350 billion small business loan program

Big banks favor some clients under $ 350 billion small business loan program

By Emily Wheatley
March 9, 2021
25
0

Griff Neal set his alarm clock for 3 a.m. on Friday so he could be among the first to apply for a loan under a new federal program designed to help small businesses survive the coronavirus pandemic.

Bank of America Corp.

BAC 0.50%

sent him back that morning. The reason: The auto parts supplier he runs, Encap Technologies Inc., had never borrowed from the bank before.

“I was literally devastated,” said Mr. Neal, president of the company. Encap, he said, has had checking and savings accounts with Bank of America for two decades, and the bank manages the retirement accounts of its employees.

Small business owners have flooded banks with demands for the Paycheck Protection Program, a $ 350 billion slice of Congressional $ 2 trillion coronavirus stimulus package intended to help small businesses and keep workers off the unemployment lists. Many were quickly turned away because they did not have the right connections with the banks offering the loans.

Bank of America changed its position on Saturday after customers flooded it with complaints, dropping the requirement that applicants have a prior lending relationship with the bank. But the episode rocked small business owners, who fear the pot of money will run out before they can tap into it. Funds are distributed on a first come, first served basis and could run out in a few weeks unless Congress steps in.

Wells fargo

& Co. said on Sunday that customer interest indicated it had already “reached capacity.”

STAY INFORMED

Receive a coronavirus briefing six days a week and a weekly health bulletin once the crisis subsides: register here.

Mr Neal tried again on Saturday morning after a Bank of America loan officer informed him the bank would accept his request. Although Encap is now eligible, many others are not; Bank of America does not accept inquiries from customers who have borrowed money from other banks.

Mr. Neal received confirmation from Bank of America that he had received his request and would follow up on a request for documentation. He said he was concerned that Bank of America was too overwhelmed to process his request quickly.

“Will we get this funding in a reasonable amount of time before the money runs out?” ” he said. Encap, based in Palatine, Ill., Which employs less than 100 people, expects its revenue to drop by a third, to $ 20 million, this year.

President Trump enacted a landmark $ 2 trillion bill at the end of March to provide relief to workers and businesses affected by the novel coronavirus pandemic. WSJ breaks down what’s in the package. Photo: G. Ronald Lopez / ZUMA Wire

A Bank of America spokesperson said the bank’s initial decision to focus on existing borrowers was to speed up the application process. “If everyone shows up at Bank A, Bank B, or Bank C, that means it’s going to slow the process down,” CEO Brian Moynihan told CNBC on Friday.

The Paycheque Protection Program began accepting applications on Friday. It provides government-guaranteed loans to cover eight weeks of wages and other expenses, which are forgivable if companies keep their workforce largely intact and use the loans for qualifying expenses such as rent and public services.

WE WANT YOUR NEWS

Tell us how your small business is affected by the novel coronavirus and how you are responding. What is your biggest challenge? Are you looking for government assistance? How does the application process go? Did you receive any money? Email us at [email protected] and write “Small Business” in the subject line.

For now, loans are only available through banks that already participate in other loan programs of the Small Business Administration, a group that includes most of the largest US banks. The Treasury Department said it plans to allow other lenders to participate, but did not detail a timeline.

Big banks have the size and manpower to distribute money to a large number of small businesses. Bank of America said about 171,000 of its customers have applied for payday loans worth more than $ 32 billion.

JPMorgan Chase

& Co., which began accepting applications Friday afternoon from businesses with checking accounts at the bank, has more than four million small business customers. Wells Fargo said it would only consider granting payday loans to nonprofits and existing clients with fewer than 50 employees and that it would only extend $ 10 billion under the program. , citing a regulatory cap on its balance sheet.

Some business owners have said they were initially tricked into believing banks would process their claims, only to find out late last week that they weren’t.

Jim Hourdequin, Managing Director of Lyme TimberCo. in Hanover, New Hampshire, spoke to a few banks in the loan program before choosing Bank of America for the seven of its holding companies that have banking relationships with the big bank.

He was told on Friday that his businesses did not qualify. The about-face was “grossly unfair to companies like ours that don’t use debt through the bank,” Hourdequin said.

Jim Hourdequin, fourth from left, Jan. 8 with colleagues from one of his companies, Mountaineer Mechanized, which was featured in a small business loan application.


Photo:

The Lyme Lumber Company

On Saturday, the bank’s message to Mr. Hourdequin changed again. Lyme’s small logging and forest management companies, which together employ 63 people in rural communities, were now eligible to apply for a payday loan under the bank’s new guidelines.

The big banks’ decision to focus on existing customers could hurt smaller, minority-owned businesses that are less likely to have accounts with them, as well as businesses in rural areas where they have fewer branches. African-American-owned businesses were 20% less likely to obtain financing from large banks than white-owned businesses with profitability, credit risk and other similar factors, according to researchers from the banks of the Federal Reserve of Atlanta and Cleveland.

“If banks only serve their customers, then the very companies that might need access to the PPP program the most will be left out, there’s no doubt about it,” said Michael Korengold, Managing Director of Enhanced Capital Group LLC, a non-bank lender focused on financing small businesses in underserved areas.

Mr Korengold said his company would like to provide loans under the new program, but is still unsure how companies like his apply to participate.

Treasury Department rules for the program encourage banks to focus on businesses they already know. Lenders should collect enough information from new applicants to ensure they are not criminals or money launderers to avoid being fined by regulators. For existing customers, however, banks don’t have to do any additional homework to make sure their borrowers are in compliance with the law.

Conor Forde, owner of a painting contractor in San Francisco, was able to use Bank of America’s online portal on Friday to apply for a loan to continue paying his 16 employees because he has a credit card and checking account. Near the bank.

“It was incredibly easy,” said Forde, who estimates the entire application process took him around 10 minutes. On Sunday, he received an email from Bank of America asking him to gather the documents needed to process the loan, including last year’s tax return and payroll information.

Mr Forde said his wife, Kelly, was turned down the first time she tried to apply because her childcare business did not have a credit card, line of credit or credit card. business loan from Bank of America.

Ms Forde tried again on Sunday. Bank of America accepted his candidacy.

Write to Ruth Simon at [email protected] and Peter Rudegeair at [email protected]

Copyright © 2021 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8

Related posts:

  1. How Joe Biden’s student loan forgiveness could explode your tax bill
  2. Forgive Student Loan Debt? A clumsy idea
  3. Bloomberg’s BSBY Short-Term Credit Sensitive Index Now Available for the US Loan Market
  4. US student loan system will lead to ‘inevitable cancellation’, says expert

CATEGORIES

  • Aston villa
  • Capital
  • Holland and barrett
  • Latest news
  • Pizza hut

RECENT POSTS

  • Stamegna Retail Management will organize two events in London in July
  • Top-ranked pizza chains in each state, based on GPS data; Little Caesars ranks #1 in Massachusetts
  • Aston Villa’s record against Man City is bad but Coutinho could be the key
  • Pulaski County Justice of the Peace Responds to Claims She’s Ineligible
  • Amber Heard’s mental health issues shouldn’t be used as a weapon

ARCHIVES

  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • March 2021
  • March 2020
  • TERMS AND CONDITIONS
  • PRIVACY AND POLICY