Legislation announced Wednesday would allow credit unions to make coronavirus relief loans to businesses without fear of bumping up against the member business lending cap.
The biggest lenders seem to have handled the corporate rush for cash heading into the economic shutdown caused by the coronavirus pandemic. But their ability to collect is as uncertain as the economic outlook for the next year.
With the coronavirus pandemic bringing economic activity to a virtual standstill, BofA, like Wells Fargo and JPMorgan Chase, is shoring up its reserves to brace for a likely recession.
Its prediction that business conditions will remain weak this year — and into next year — stands in stark contrast to forecasts from political leaders that the economy will rebound quickly from the coronavirus pandemic.
Though hopeful for a second-half bounceback in the economy, JPMorgan Chase is prepared for 20% unemployment, lackluster GDP and losses in its loan portfolio that could reach tens of billions of dollars.
By helping borrowers now, banks hope customers can quickly catch up on payments once the coronavirus pandemic ends. If they can’t, interest income will remain low and charge-offs could pile up if the crisis drags on.
PayPal, Intuit QuickBooks Capital and Square Capital have been named direct lenders in the Paycheck Protection Program, and more await the OK. They could be crucial to reaching the smallest firms trying to survive the economic toll of the coronavirus pandemic.
