Corona Virus Loan Applications Start Today

Today is the day that small businesses can start to apply to their local banks for corona virus inspired SBA-backed Paycheck Protection loans that can ultimately be forgiven if the employer meets certain goals.

Screen Shot 2020-04-03 at 9.23.53 AM

But the Wall Street Journal notes that many financial institutions, both the money center banks and the local lenders, still are unsure of the process.

Wells Fargo said that they will loan to existing customers only and small banks don’t seem to know what paperwork will be required. Others aren’t sure of how much due diligence on borrowers must be documented and whether they will be able to sell the loans into the secondary market. Bank of America just said that they will be the first bank to accept applications.

Since the loans will bear an interest rate of 1% (up from the originally mandated 0.5%), it’s possible that they may not make the effort break even for the banks creating a non-incentive to make the loans.

From what I’m hearing from the local business community, these loans are life-or-death for many small entities, so the government and banks have to make this work.

https://www.wsj.com/articles/the-rush-for-350-billion-in-small-business-loans-starts-friday-banks-have-questions-11585828455?mod=trending_now_pos5

About JeffKoeppel

I am a corporate/securities attorney in the Washington, DC area. Prior to joining the firm, I was a Senior Attorney Advisor in the Division of Corporation Finance at the U.S. Securities and Exchange Commission. I am a member of the Bars of the States of Maryland, New York and the District of Columbia. You can also follow this blog on LinkedIn at: http://www.linkedin.com/pub/jeffrey-a-koeppel/0/63/5a9
This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.