US Fed Launches Small Business Loan Support Program
WASHINGTON (AFP) – US President Donald Trump on Monday said he was happy with a program announced by the Federal Reserve to help ease the government’s massive lending program for small businesses devastated by COVID-19 shutdowns .
âIt works really well,â the president said during his daily COVID-19 press briefing.
“To date, tens of thousands of small businesses have requested more than $ 40 billion in aid,” he said, noting that the funds “will save nearly two million jobs.”
But Trump was unable to clarify how much had already been paid to companies.
The Fed has said it will essentially buy loans that banks give to small businesses under the Paycheck Protection Program (PPP) launched on Friday.
This would leave the lenders with money on hand to make other loans.
The program offers $ 350 billion in government-guaranteed funding through private lenders, which will be forgiven if businesses ranging from stores to restaurants use the funds largely to pay their workers.
The program, which is part of the $ 2.2 trillion bailout approved in late March, was rushed by the Treasury and the Small Business Administration (SBA) last week.
Banks complained that they were not given detailed advice on how to handle the process while borrowers were left in limbo.
Trump also said the government was prepared to ask for more money if needed.
White House economic adviser Larry Kudlow said Monday there were 130,000 loans totaling $ 38 billion from 2,400 lenders.
But questions about the program have arisen on everything from bank money laundering rules to how quickly loans could be issued by lenders who were not previously part of SBA programs.
On top of that, there were detailed details on the forms and documentation.
Some companies that applied for the funding said their applications had been added to the stack, but did not say how long they would wait.
The Association of Independent Community Bankers (ICBA) on Monday called the program’s launch “flawed” and cited a “lack of clear instructions” and “massive delays” in processing loans due to traffic jams at the SBA .
âAlmost 48 hours after the program was launched, hundreds of lenders are still trying to obtain authorization to access the SBA system so that they can process loans,â wrote ICBA President Rebeca Romero Rainey, in a letter to the agencies.
She also called on the Fed to launch a secondary market for loans – similar to what is done with mortgages where loans are sold, having them written off from the books of the original lender – and the Fed’s announcement Monday does exactly that.