JPMorgan Chase has temporarily stopped accepting applications for small business loans outside the government’s Paycheck Protection Program, the bank told the Financial Times on Wednesday.
Chase has been inundated with more than 375,000 requests for $40bn of loans under the $350bn small business rescue scheme, a higher number of applications than any other bank, its consumer head Gordon Smith told President Donald Trump on Tuesday.
A Chase spokeswoman said the bank was now devoting all of its small business underwriting resources to process these applications and had “temporarily suspended” taking other applications from small businesses. The bank was continuing to process non-PPP applications already in train, she said, and would revisit the issue of new applications next week.
The PPP loans are guaranteed by the federal Small Business Administration. They cover up to 2.5 times the typical wage bill at businesses with under 500 people, helping them to keep paying staff during shutdowns enforced during the coronavirus outbreak.
The entire amount of the loans, which can run to $10m each, will be forgiven if recipients can prove they used the money for wages and other approved expenses, making it by far the most attractive form of short-term financing for cash-strapped companies.
Still, if small businesses have borrowing needs beyond the PPP’s limits, or if they want to borrow for purposes beyond wage bills, they would need to seek other facilities.
Joe Rosenberg, a partner at business incubator Grove North Ventures, had sought a $250,000 loan from Chase to fund the production of N95 respirators, which have been in short supply since the outbreak.
He said he was told that the bank was “not entertaining any” small business lending outside of the PPP programme and was pointed to the New York governor’s office, which has agreed to fund the production of critical equipment.
Coronavirus business update
How is coronavirus taking its toll on markets, business, and our everyday lives and workplaces? Stay briefed with our coronavirus newsletter.
Wells Fargo, which reopened its PPP operations on Wednesday after the Fed agreed to temporarily lift a cap on its balance sheet, said it was “business as usual” for regular small business lending. Bank of America could not immediately comment on whether it had suspended regular small business lending so it could deal with the avalanche of demand.
Bank of America had more than 240,000 PPP applications for $40bn by Tuesday evening, Wells Fargo said it had more than 170,000 applications before it shut its scheme to applications saying the asset cap meant it could not lend more.
Citigroup has yet to launch its programme, and on Wednesday told customers it was “working as quickly as we can” on it, while discouraging them from approaching call centres and branches where staff “do not have any additional information at this time”.
The PPP scheme has been beset by confusion and delays since its launch on Friday last week, despite the White House urging banks to disperse money as quickly as possible. Congressional leaders have discussed expanding the scheme by another $250bn.