Banks could end up holding many low-rate Paycheck Protection Program loans on their books for two years, and dealing with irate borrowers who failed to meet federal requirements for forgiveness.
Up to 12% of loans under the $660 billion small-business rescue program could be tied to misleading or completely phony applications, fueling concerns about lenders' potential liability.
Community banks that have used the Paycheck Protection Program to help businesses ride out the coronavirus outbreak are looking to turn that goodwill into deeper loan and deposit relationships down the road.
The program, created in response to the 2008 financial crisis, generated $19 billion in small-business loans. It could be used as a viable path out of the coronavirus pandemic.
Small banks are a lifeline for many local businesses and should be given first crack at distributing funds from a continuation of the federal stimulus program.
Minorities are often hit harder financially during a crisis, but if regulators move forward on revamping the Community Reinvestment Act, they’ll only make matters worse.
