The US government doubled the interest rate on $350 billion in loans available to small businesses from 0.5% to 1% on Thursday after small banks reportedly complained they couldn't afford to lend at such a low rate.
The guidelines direct lenders to submit SBA Form 2484 along with payroll documentation to get approval from the government to issue the loan, as well confirmation of the government's 100% guarantee of that loan.
"GDS Link is a valued partner in the lending space".
The country's largest bank, JPMorgan Chase, also said it would be delaying PPP loan processing until there was better clarity, both on what lenders need to provide and what borrowers need to do.
The loan program is available to all businesses - including nonprofits, veterans organizations, tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors - with 500 or fewer employees. Loan payments will be deferred for 6 months.
The program allows companies to borrow 2.5 times their average monthly payroll, up to $10 million, but neither firms nor lenders knew exactly how that would be calculated.
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"The Paycheck Protection Program will provide critical capital for businesses facing a temporary loss of revenue as a result of coronavirus and protect the livelihoods for workers across the state that these businesses provide", said Mark Burton, CEO of the Michigan Economic Development Corporation.
Darryl DePriest, who was chief counsel for the SBA office that advocates for small business from 2015 to 2017, called the $349 billion "almost like a first installment" and predicted Congress will eventually appropriate more money.
It also throws the almost 67-year-old SBA into a higher profile role than ever before, one that some lenders worry it could struggle to fill. The loan forgiveness can be reduced if a small business owner decreases their full-time employee headcount, decreases salaries or wages by more than 25 percent for any employee that made less than $100,000 annually or rehires full-time employees by June 30 for changes made between February 15 and April 26. "The Treasury said they intend to purchase these loans, but we don't have the mechanism for that".
Greg Flynn, CEO of the Flynn Restaurant Group, which calls itself the largest restaurant franchisee in the US and owns more than 1,200 Applebee's, Arby's, Taco Bell and Panera locations, said larger employers should get relief, too, so that they can quickly rehire workers.
He said he views the small-business loan effort as a troubled but necessary endeavor. "I think it's going to be a mess for weeks".
For more information on the programs, visit the U.S. Department of Treasury and the U.S.
The International Franchise Association argued in a letter to the SBA that would allow the program "to achieve its intended outcome and have maximum impact". At 4 percent seen in other emergency loans, it's tricky, but at 1 percent it's hard to find someone to take over the loan, Hurn said. Borrowers have been using it all week and some lenders have posted digital applications on their websites based on it and were building automated experiences for their customers. A single business can only apply for one loan under the program.
"As long as you hire those people, your loan will be forgiven", Mnuchin told FOX Business.