The U.S. Small Business Administration’s (SBA) $350 billion loan program went live last Friday. Companies with up to and including 500 employees can get loans of up to $10 million at 1% interest; the money can be spent on salaries, rent and utilities. If the company doesn’t lay off employees, the amount of the loan spent on such priority expenses during the eight weeks between March 1 and June 30 will be forgiven – both the body of the debt and the interest.
However, the influx of those who wanted to receive funds in the first days was so great and the measures to ensure the functioning of the program so unprepared that it provoked numerous complaints from businesses and banks alike. The latter complained that the Ministry of Finance and the SBA did not explain many of the details, including the loans, did not provide application forms for the new program, and that the SBA website form had many fields that were unclear to fill in (also manually), and the site kept freezing. Many banks were not ready to accept and process applications right away. So, JPMorgan Chase began to do it only on Monday morning and quickly suspended the portal until 5 p.m. due to technical problems. Citigroup did not start accepting applications by Tuesday. Bank of America, though it had already started the program on Friday, with 3,000 employees, gave priority to customers with existing loans, followed by customers receiving other bank services, and only then did it promise to consider applications from outside. This has caused a wave of outrage among entrepreneurs and lawmakers.
The latter are already preparing to pass an additional package of aid to SMBs — another $250 billion by the end of this week, according to The Wall Street Journal (WSJ) — and include a requirement for equal treatment of those applying for loans.
According to the data, the SBA has registered requests for 220,000 loans totaling about $66 billion, the WSJ cited data from a letter to Congress from the presidential administration asking for more funding for the program.