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Banks are not ready to lend to small businesses under the $2.2 trillion coronavirus relief package passed by Congress but will be in the coming days, according to the CEO of a top regional bank in the New York metropolitan area.
“The banks are using their balance sheet –with the guarantee of the SBA — in order to produce these loans,” ConnectOne Bank CEO Frank Sorrentino told FOX Business’ Maria Bartiromo. “And what we are waiting for right now — with some final tweaks to the ruleset– the application has changed a couple of times in the last 24 to 48 hours. I know people are lining up saying, hey, you know, we want to rush through that door, but banks are just not ready at this moment in time to pull the trigger.”
Sorrentino said the program is “very widespread.”
“We started last Friday. We started bringing those clients on board, collecting the data that we knew we needed to collect,” he said. “We also have a subsidiary called BoeFly, which is a fintech player, which has over 8000 applications pending and close to $2 billion in… loan demand.”
Phu Dang, left, the owner of i5 Pho restaurant, gets help from a contractor as he boards up his business, Monday, March 30, 2020, in Seattle’s downtown Pioneer Square neighborhood. (AP Photo/Ted S. Warren)
Starting Friday small business owners can go to any existing Small Business Administration lender, in addition to any FDIC-insured institution, credit union or financial-technology lender that is signed up for the program and apply. But Sorrentino believes loans will begin to roll out within days.
“Now, I know everyone's focused on today — Friday, April 3rd," he said. "But if it's not today, maybe it'll be Monday or day after that — but we're not talking weeks — we're talking hours or days. And that money will make its way into the economy and it will serve the purpose that it was intended for.”
Aside from rule changes, he said, the package was rolled out very quickly and there are concerns in regards to the economy and banking industry that can be rectified within the next 24 hours “at the worst.”
“There are some economic concerns as to the pricing of different things, whether a secondary market will develop or not," Sorrentino said. "There are issues around BSA, AML and all the other KYC concerns that we should have as a banking industry. And there are some discrepancies between the bill that was passed and some of the rules that were written that have to be reconciled.”
Sorrentino also said there are benefits of applying to these loans at your own bank.
“Banks can move much, much quicker if you already have an account there. If you're brand new to a bank now we have to identify who you are and we have to put you through a process that could slow things down by a day maybe or two,” he said.