Small Business Loans and the Coronavirus Stimulus: Here's How the Major Banks Are Handling PPP Applications
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Small business owners across the country contacted their banks on Friday to apply for a loan via the federally implemented Paycheck Protection Program, only to face additional bank-specific restrictions.
The program — a $349 billion fund backed by the Small Business Administration — was created as part of the multi-trillion-dollar CARES Act stimulus package and designed specifically to help small businesses recover from the damaging effects of COVID-19.
Per the bill’s language, any small business (500 or fewer employees, unless otherwise stated by the Small Business Administration) that’s independently owned and operated, and not a dominant player in its field, is eligible to receive up to $10 million. All the company had to do was apply through its FDIC-insured bank.
But it’s proving to be a little more complicated than that, as banks set their own, individual guidelines on Friday, catching applicants off guard.
Bank of America initially required applicants to have both a borrowing relationship and a core banking relationship, based on guidance from the U.S. Treasury Department, a bank spokesperson told Money via email.
"The more an institution like ours knows about a client, the faster we can process a loan," the spokesperson said. The company has since changed its requirements, requiring only a Bank of America checking account and not a loan...but it doesn't allow an applicant to have a line of credit with another bank.
Things are moving quickly. Here’s the latest on where the big players stand with the Payment Protection Program. We'll continue to update this story as new information comes in.
Bank of America
