WASHINGTON (BRAIN) — A program authorizing billions of dollars in forgivable small-business loans hit major snags on Friday, after final Treasury Department guidance went out late Thursday combined with application issues to hinder the process.
The Small Business Administration Paycheck Protection Program was scheduled to be available Friday to eligible candidates. The program authorizes up to $349 billion in forgivable loans to small businesses with fewer than 500 employees during the COVID-19 pandemic. Loan terms will be universal.
However, in order for banks to give the money, they need to know who's going to replace it so they can continue issuing loans. The treasury finally said Thursday night it will assume the risk. In addition, the loan application framework was delayed, Brock Blake, founder and CEO of Lendio, told CNN on Friday afternoon.
"That was released last night at 10:44 Eastern," Blake said of the application. "And so the lending institutions across the country are scrambling trying to implement technology so business owners can go online and actually apply for these loans."
Consequently, most lending institutions were not prepared Friday morning to begin lending. Blake said some will come online in the afternoon.
"Probably more likely the majority of lending institutions will come online Monday," he said. "The challenge is most small banks and credit unions are not prepared to spin up a technology to accept applications so quickly."
White House Economic Adviser Larry Ludlow said, "There are always glitches."
BRAIN received an email Friday morning from one frustrated bike retailer seeking a loan.
"This has nothing to do with the number of applicants," said Hill Abel, CEO of Bicycle Sport Shop in Austin, Texas. "There have been no applications submitted at this point. It's the fact that applications cannot be submitted today that our banker is pointing out. They haven't finalized the guidance rules nor are they ready to train the banks on the process."
This largest stimulus package in history was rolled out in seven days, aiming to align thousands of lending institutions with millions of small business owners. PeopleForBikes held a popular webinar on Thursday, with a portion outlining the Small Business Administration Paycheck Protection Program and how it can benefit bike retailers.
