Demand for the Paycheck Protection Program under the CARES Act is skyrocketing.
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(Updated 3:45 p.m. ET, April 7, 2020)
Topline: As the Paycheck Protection Program (a provision under the federal economic stimulus plan that sets aside $349 billion in rescue loans for small businesses) gets underway following a chaotic launch, banks are already reporting surging demand from businesses struggling to stay afloat during the coronavirus crisis. The latest:
- In a call with President Trump this afternoon, Bank of America CEO Brian Moynihan said the firm has received 250,000 applications since the PPP’s launch on Friday, at a rate of several thousand every hour; Moynihan also said 3,000 people at Bank of America are working to process the applications.
- Treasury Secretary Steven Mnuchin said Tuesday that he has asked for an additional $250 billion in funding for the PPP.
- Over the weekend, Senator Marco Rubio tweeted that based on current demand, money in the program could run out by June 6th.
- Wells Fargo said Monday that it will focus its lending on nonprofits and small businesses with fewer than 50 employees (though the Paycheck Protection Program as a whole includes companies with fewer than 500 employees), citing Fed restrictions on its balance sheet capacity; the bank says it has already enough applications to that exceed its capacity of $10 billion to lend.
- “We are committed to helping our customers during these unprecedented and challenging times, but are restricted in our ability to serve as many customers as we would like under the PPP,” Wells Fargo CEO Charlie Scharf said in a statement.
- Not all banks are up and running: Citigroup C says that applications will be “available shortly.”
Key background: The Small Business Administration’s Paycheck Protection Program is a key part of the economic stimulus package that allocates $349 billion for small businesses to access forgivable loans for payroll and overhead. The program will offer loans of up to $10 million at 1% interest to companies and nonprofits with fewer than 500 workers so they can cover two months of payroll and overhead expenses. If the borrower retains workers and doesn’t cut their wages, the government will forgive most or all of the loan and repay bank lenders.
This is a developing story. Please check back for updates.