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Bank of America, JPMorgan begin accepting small business loan applications

The Trump administration’s emergency $349 billion Paycheck Protection Program to help small businesses cover their payroll costs was set to roll out on Friday April 3, with banks accepting applications from businesses slammed by coronavirus. Of the major U.S. banks, Bank of America and JPMorgan were able to facilitate the process, but not without hurdles. The Final Round panel discusses.

Video Transcript

JEN ROGERS: Today is a big day if you are a small business owner and you have been waiting for relief coming from Washington. People have been waiting all week to be able to file applications to try and get loans to meet their payroll, to meet their rent requirements. So it opened up today.

It is-- it's working at some banks, it seems. Other banks don't seem ready. Dan Roberts, you have been calling around and talking with people. I've talked to some small business owners looking to apply for these, and their banks aren't offering it yet. So who is, and who isn't?

DAN ROBERTS: Yeah, Jen. Look, it's a $349 billion relief program, right? And I think that, before we dive into the specifics, I thought this comment last night was very telling. And by the way, the sort of faucet was supposed to turn on midnight last night. That was when banks were supposed to be able to start processing the applications for these loans.

So this was the CBA, or Consumer Bankers Association, saying in a statement last night-- "Having just received guidance outlining how to implement this $349 billion program literally hours before it starts, we would ask for everyone to be patient as banks move heaven and earth to get a system in place." I mean, that's what we were hearing already yesterday across the board was banks saying, we don't even have all the information yet to start processing these loan applications. So we can kind of-- depends who you want to blame. That's sort of a separate discussion.

But as of this morning, all the big banks weren't quite up and running. No one was really up and running yet this morning, and again, they were supposed to be up and running at midnight. Finally, B of A, Bank of America, was kind of the first to get its web portal for applying for these loans up and running. But B of A was quickly criticized twofold.

First of all, they were having some outages on the site, which makes sense. B of A received something like 15,000 applications in just the first hour. But also, there were a lot of angry tweets from people saying, well, I've just been rejected at the B of A application page, because I'm not an existing B of A loan client.

And Yahoo Finance's Brian Cheung also spoke to a small business owner who said that she had had a loan from B of A in the past, then paid that off, and, because that was paid off in the past, she is not a current client and got rejected. So that was a problem. It was people getting rejected for the loans. It's not supposed to be that they're only giving the loans to their existing clients.

And then tech-wise, it's an issue. I mean, Chase took until 2:00 PM today to get up and running. Citi still isn't up and running. None of the big Silicon Valley banks reportedly are up and running. They're just getting slammed with applications.

By 2:00 PM, B of A had come out and said that it had received something like 58,000 loan applications. So it's an onslaught, it's a flood, which of course makes sense. And you can blame whomever you want here for lack of guidance, but the banks were not prepared for this flood today.

JEN ROGERS: And in Bank of America's defense, I mean, they said they wanted to do it the way with the loans because then they would have information on people-- already have these relationships-- as a way to get it going out faster than they could. At this point, it seems like the president has changed his tune on Bank of America, saying they've been unbelievable, they've stepped up in here. Small Business Administration saying they have loans originating of about more than $2.2 billion.

It seems, from the one small business owner that I did talk to who was planning on applying, that the application itself has changed. Like, what people thought they were gonna be doing a few hours ago this morning, and then having the requirements change, it's just one sort of frustration after another on a small level.

DAN ROBERTS: I think all that is true. And let's also mention, this is not easy to just throw this together. I mean, in defense of all the different parties involved, everything is moving so quickly. I mean, this part of the $2.3 trillion package, this part that is just for small businesses was only kind of hammered out within the last couple days. And then the SBA was changing the guidelines as recently as last night.

One big key change that happened in the last, I think, 48 hours was banks said, well, wait a minute, this is really gonna hurt us financially. So Mnuchin kind of threw them a bone by raising the interest rate on the borrowers from half a percentage to 1%. So now the interest rate is 1%. That'll help banks a little bit.

But yeah, the guidance was changing as last minute as last night. And as you mentioned, with B of A, yes, it makes sense that B of A wants to focus on clients where it [? already has ?] the information. But it is worth mentioning, in contrast, that Chase, which finally got its portal up and running around 2:00 PM today, has not said the same. Chase it is not only granting the loans to its existing clients.

So that's also maybe a problem of lack of consistency across the board of how each bank is gonna handle this differently. And then this morning on our show "The First Trade," we spoke to the CEO of a smaller bank who said, look, in our case, we're trying to grant all the loans we can. And for us, it's not about the interest rate, and we just want to help small businesses. Now, of course, that's nice to say at this point, but we'll see down the line how much being generous with the loan approvals hurts that small bank we spoke to. But point being, there's a lack of consistency right now. But for small businesses, they just want to get that money.

JEN ROGERS: And I think one of the other aspects that's frustrating for small business owners is the idea that this is not an endless supply of money, so people want to be applying right away. And they're worried that if they don't get it in right away, that they're going to be left out of it somehow. So I think that that is leading to some anxiety among small business owners about trying to get it in right away. But at least it seems like the banks are-- you know, obviously, they say all of them are trying to get this sorted. And hopefully next week will be a very different story.

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