Lenders must balance the financial risk of extending credit without explicit backing from the Small Business Administration against the reputational risk of delaying aid for needy borrowers.
The central bank is creating a facility to provide financing to banks participating in the Small Business Administration’s Paycheck Protection Program.
Wells Fargo said it can't fully meet demand from small businesses rushing to participate in a U.S. relief program because of constraints imposed by the Federal Reserve on the bank's growth.
Sen. Marco Rubio, R-Fla., said that $349 billion will likely not be enough meet loan demand from small businesses seeking a lifeline to help them weather the economic downturn brought on by the coronavirus outbreak.
While the federal government is touting the early success of the Paycheck Protection Program, community banks are complaining about headaches and glitches.
Banks, under pressure to act hastily, began taking applications for government aid to small businesses hit hard by the coronavirus outbreak. But narrow eligibility rules at some banks angered business owners and lawmakers.
Emergency loan program plagued by chaos on eve of launch; why Moven, one of the first challenger banks, is calling it quits; Fed faces conundrum on whether to remove Wells Fargo's asset cap; and more from this week's most-read stories.
The decision sparked outrage from small-business owners who have checking accounts with the bank but not loans or business credit cards. Bank of America started taking applications Friday for a $349 billion program that's intended to offer aid to small businesses suffering from the shocks of the coronavirus pandemic.
