Banks warn that new small-business funding could evaporate in 2 days – By Zachary Warmbrodt (Politico) / April 20 2020
Congress is poised to add $300 billion to the loan program, but banks are handing out $50 billion per day.
Lawmakers are nearing a deal to restart an emergency small-business loan program that exhausted its funding last week — but it may buy only a few days before the program screeches to a halt once again.
Lenders are warning their customers they might not be able to secure loans even if Congress provides an additional $300 billion as soon as this week. Banking industry representatives say the program has a burn rate of $50 billion per day and needs closer to $1 trillion to meet demand, with hundreds of thousands of applications pending.
“This is going to go within, at most, 72 hours,” said Consumer Bankers Association President Richard Hunt, who represents large banks. “But the odds are more like 48 hours.”
The legislation also likely won’t tackle controversial elements of the program’s structure, chiefly an exemption that allowed large companies such as Shake Shack and Ruth’s Hospitality Group to obtain tens of millions of dollars in loans, as well as rules that encouraged banks to favor their existing customers.
The hurried rescue effort had only just begun to operate as intended when funding lapsed Thursday, after banks at first muddled through with a lack of guidance from the Trump administration and an overloaded Small Business Administration system needed to approve loans. Lenders handed out nearly 1.7 million loans from April 3 until the initial allocation of $350 billion for the program was exhausted.
Continue to article: https://www.politico.com/news/2020/04/20/bank-small-business-funding-coronavirus-197372
