For Small Business Loans, Smaller Lenders Can Be Better
For Small Business Loans, Smaller Lenders Can Be Better
(Bloomberg Businessweek) -- Consider Borrowing from Community Lenders
Bloomberg Opinion columnist Joe Nocera weighs in the problems businesses have encountered in applying to and receiving funds from the SBA’s Paycheck Protection Program. Turning to community lenders, rather than national giants, could mean greater success, he suggests.
“It is undeniable that there were problems with the Paycheck Protection Program. But now, with the Senate having passed legislation authorizing $320 billion of additional PPP loans — and the House likely to approve the bill in the next day or so — the important thing is to understand what went awry. With any luck, maybe it’ll go better this time around. My advice: Think small,” he writes.
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More than 300,000 customers of JPMorgan’s business banking unit, which serves smaller firms, applied for loans through the Paycheck Protection Program. About 18,000 were funded, for a 6% success rate. By comparison, about 5,500 larger, and sometimes more sophisticated, customers of the commercial banking business applied for funding. Nearly all of them got loans, according to the bank’s data.
The legislation, which the House could take up as early as Thursday, includes $320 billion for the Paycheck Protection Program designed to help struggling small businesses keep their workers on the payroll.
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After 22 million jobs vanish, the scramble is on to get a safety net to America’s self-employed.
The U.S. Travel Association -- which represents airlines and other transportation companies, local attractions, tourism bureaus and other parts of the industry -- released an economic analysis on Monday that said the sector is on track to lose 6.9 million jobs and $83 billion in revenue in April alone as a result of the pandemic.
Distribution of the first $248 billion of Small Business Administration coronavirus-relief loans has been uneven so far,
estimates from Evercore ISI of eligible payrolls in each state show.
Funds for the Small Business Administration’s $349 billion Paycheck Protection Program, or PPP has been exhausted; and funding also has lapsed for the Economic Injury Disaster Loan program, or EIDL, offering government loans and emergency grants of as much as $10,000.
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