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Community banks have processed hundreds of small-business loans intended to address the economic calamity caused by the coronavirus pandemic, even as some of the biggest banks in the country say they’re not ready to process applications.
A senior Treasury official told FOX Business that more than 6,000 loans worth more than $2 billion had been processed by 2:30 p.m. ET on Friday, dominated by community banks.
The $349 billion Payroll Protection Program, part of the $2 trillion stimulus package that President Trump signed into law last week, is designed to get cash in the hands of struggling small businesses and incentivize them to keep staff on payroll, or re-hire workers who have already been laid off. To receive the aid, businesses must have been operational by at least Feb. 15.
Companies may borrow up to 2.5 times their payroll, or up to $10 million, which can be used for payroll and other expenses, like insurance premiums, mortgages, rent or utilities through June 30. The loans, which are guaranteed by the federal government, will be fully forgiven if 75 percent of the money goes toward keeping workers employed, according to the SBA.
"As long as you hire those people, your loan will be forgiven," Mnuchin told FOX Business. "This keeps 50 percent of American workers at work."
Some large lenders like Wells Fargo, Huntington Bank and Bank of America have said they’re ready to go. Although JPMorgan Chase initially said it will not accept applications on Friday, citing lack of guidance from the Treasury Department, the nation's largest bank reversed course Friday afternoon and said it will begin processing applications. Bank of America said it's received 28,000 applications so far — but its decision to process applications from current loan holders first frustrated some.
“Unfortunately even as a small business client who has banked with @bankofamerica since day 1, I cannot apply because we do not have a lending relationship,” tweeted Lindsey Johnson, the founder and CEO of Weezie Towels. "We have never required debt until now! This loan is make or break for our business and employees and we are unable to apply.”
The program is expected to run out of cash quickly, but Mnuchin said last week that officials could ask Congress to approve more money if that happens.
FOX Business' Edward Lawrence contributed to this report.