WASHINGTON (Reuters) – About $ 70 billion of a $ 350 billion pot of loans to cover the payrolls of struggling small businesses has been made by U.S. lenders in recent days, President Donald Trump said on Tuesday, adding that this money had been “mainly loaned”.
In fact, no one, including the administration, seems to know how much of this money has passed into the hands of small businesses, many of whom say they haven’t seen a dime yet.
“They say it’s going well but on the streets no one has received any funds yet,” said Sachin Mahajan, who closed his restaurant, Karma Modern Indian, in the heart of Washington, DC, on March 16 after business has plummeted.
“All of the business owners I’ve spoken to, none of them have seen anything yet,” said Mahajan, who submitted his payroll claim on Monday, after his bank asked him to submit to again online its Friday paper request.
Neither the US Treasury Department nor the Small Business Administration, which jointly administer the program, have formal data on disbursements, which are issued by participating banks, a senior administration official told Reuters.
Reuters contacted five major Washington-based banking business groups, as well as the United States Chamber of Commerce, all of which said they did not have the data on Tuesday.
Only one of the groups, the Independent Community Bankers of America (ICBA), said it was trying to collect information on loan disbursements from its members.
“As a single anecdotal example, one of our largest SBA lenders is trying to disburse today,” said Paul Merski, executive director of ICBA.
“It’s the first one I’ve heard of that would actually kick the money out.”
Wells Fargo & Co, a major small business lender, hit a cap of $ 10 billion on Sunday on loan applications it plans to accept under the program, but said Tuesday it did not yet disbursed funds to clients. JPMorgan and Bank of America, which have been processing requests since the program began on Friday, declined to comment on the disbursements.
Launched on Friday as part of a $ 2.3 trillion congressional economic relief plan, the $ 350 billion program allows small businesses affected by the coronavirus to apply for government guaranteed loans from participating banks. These loans will be canceled if they are used to cover salary costs, subject to certain conditions.
Speaking on Tuesday, Trump said $ 70 billion had “been loaned,” but that figure likely refers to loans that were processed by the SBA, as opposed to cash that was released to companies, three sources said. banking.
They said the amount of money distributed to small businesses would likely be much smaller because many lenders are still waiting for the SBA and Treasury to issue a loan authorization form – the last piece of the paperwork puzzle required for it to be. the money is returned to the customer.
The form the lenders were initially using was found to be incorrect, according to an SBA email seen by Reuters on Monday and the sources, and a compliant form has yet to be issued.
The cause of the heist was unclear, the sources said. The SBA and Treasury did not respond to a request for comment on loan approvals.
Without these documents, banks fear the loans may not be eligible for government guarantee or forgiveness, the sources said. Lenders are also receiving mixed signals on how to proceed: Treasury officials have verbally told banks to go ahead and issue loans, on the basis that they will be vested in the compliant regime. once the appropriate documents have been issued.
But some regional SBA offices sent an email to banks on Monday telling them to wait, according to two of the sources, and another email seen by Reuters. This has left many banks in limbo, a spokesperson for the Consumer Bankers Association said.
“Some banks do pay out money, but many are worried that without the final SBA language there might be some forgiveness issues along the way,” he said.
Reporting by Michelle Price, Pete Schroeder and Lindsay Dunsmuir in Washington; Additional reporting by Imani Moise and Elizabeth Dilts Marshall in New York; Editing by Matthew Lewis