Trump Praises Banks for Small Firm Aid Amid Loan Fund Issues
(Bloomberg) -- President Donald Trump on Tuesday praised some of the country’s largest financial firms for pledging to take new steps to help small businesses disrupted by the coronavirus.
Trump heralded their plans as he hosted a video conference with leaders of banks including Goldman Sachs Group Inc., Bank of America Corp., Citigroup Inc., and JPMorgan Chase & Co.
“We really appreciate what you’re doing,” Trump said. “I hope the media here can see what an incredible job the banks have done.”
The participants, top executives from the five biggest U.S. banks and two largest payment networks, touted their efforts to help affected businesses and consumers -- pointing to capital devoted to small business loans, an assortment of waived fees, and loans and grants to community development financial institutions.
Goldman Sachs is planning to double its balance sheet capital available to small businesses to $500 million, CEO David Solomon said. The move is in addition to $25 million for a relief fund and $25 million in grants to community development financial institutions.
The participants have also been helping the Treasury Department and Small Business Administration distribute $349 billion for the Paycheck Protection Program, part of the $2 trillion stimulus package aimed at shoring up an economy battered by the pandemic. It offers loans of as much $10 million that are forgivable if firms use the funds mostly to keep workers on their payrolls for the next two months and for expenses such as rent.
Bank of America Chief Executive Officer Brian Moynihan said his firm has gotten 250,000 applications that it’s beginning to process, and continues “to get several thousand applications every hour.” JPMorgan Co-President Gordon Smith said the largest U.S. lender had gotten 375,000 requests as of Tuesday afternoon, amounting to roughly $40 billion in loans.
Trump announced that as of Tuesday, the SBA has processed more than $70 billion in guaranteed loans from more than 225,000 business that have applied. That amount hasn’t been given to firms yet, but rather is the value of loans SBA has registered and guaranteed for lenders to complete the process and disburse funds, according to a senior administration official.
That would mean about 20% of the $349 billion appropriated for the program has already been committed. The Treasury Department is asking Congress for $250 billion more for the program, and Senate Majority Leader Mitch McConnell said the Senate could act as soon as this week to pass additional money.
Trump said the program has been rolled out with only a few “glitches,” but there’s been reports of widespread problems and confusion since it launched Friday. Lenders have complained about not being able to connect with SBA to process loans, and there were reports on Monday that E-Tran, the SBA system that lenders use, crashed.
Lenders reported that the system was working on Tuesday, but applications were trickling through, and the ability of lenders to connect with SBA to get loans approved and for non-SBA lenders to get approved was “a little bit spotty,” said Paul Merski of the Independent Community Bankers of America in an interview before the briefing.
Noah Wilcox, chairman of Grand Rapids State Bank of Minnesota and chairman of the ICBA, complained during the Trump briefing that many community banks aren’t able to participate in the program because they aren’t approved SBA lenders. The SBA plans to certify more to participate.
“We know from an informal survey that about one-third of all community banks still do not have access to the system, and that means those community banks have been boxed out, and unable to serve their communities and their customers,” Wilcox told Trump during the meeting.
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