Lenders welcomed the move as a helpful first step but are still urging policymakers to develop a broader, simpler process for expediting the approvals of loans extended to troubled small businesses under the Paycheck Protection Program.
The Small Business Administration has been covering six months of principal, interest and fees for loans that existed on Sept. 27. There are concerns the moves are masking weaknesses in lenders' 7(a) portfolios.
To date, the Small Business Administration hasn’t acted on tens of thousands of applications that lenders have submitted since early August. However, it will begin doing so by early next week, an official says.
Lenders are disappointed with a low proposed cutoff for blanket forgiveness, but they said the proposal, which waives applications for some loans, is a good first step.
Loan officers surveyed by the central bank said the subpar creditworthiness of some applicants and the ability of others to find credit elsewhere are among reasons the middle-market rescue facility has fizzled.
Banks' restaurant and hotel clients in many oceanside communities are seeing an uptick in business as travelers opt for short hops over long hauls during the coronavirus crisis. But activity could slow as colder weather approaches.
The fund will support Community Development Financial Institutions that lend to minority- and women-owned businesses. The Charlotte, N.C., company is the latest big bank to make a large dollar commitment focused on alleviating racial and economic inequality.
It's been six weeks since the Paycheck Protection Program expired and banks started filing forgiveness applications on behalf of borrowers. So why isn't the Small Business Administration responding?
With only a fraction of the funds allocated being used, Federal Reserve Chair Jerome Powell said the central bank is considering tweaks to the middle-market rescue program in an appeal to lenders wary of taking on added risk.
The agency finally detailed how it may implement congressional requirements to collect information on credit to small businesses. Lenders below certain asset thresholds and that make few business loans could be off the hook.
