The program is set to begin accepting loan requests again Monday morning, and banks expect to unleash a huge queue of applications. In preparation, the Small Business Administration, which is running the program, on Sunday told lenders it planned to pace the number of loans processed in its system.
The agency will cap the dollar amount of loans that individual banks can originate at about $60 billion, which will limit the participation of the country’s biggest lenders. Lenders with less than $50 billion in assets will not be subject to that ceiling. As the SBA tries to throttle the flow of loan requests, the agency told banks with a large number of pending applications that they would be able to submit them in a one-time, bulk filing.
In a letter late Saturday to the Treasury Department and the SBA, Pelosi, Schumer and four other key Democrats asked the administration to use its administrative power to set aside $10 billion in loan funding to be disbursed by minority lenders and community development financial institutions, which focus on borrowers who lack access to traditional banks.
“These institutions’ specific mission to serve low-income, rural and minority small business owners and communities uniquely positions them to increase the amount of PPP loans that reach our underserved businesses,” they wrote. “These businesses are the heartbeat of the diverse communities they serve and are particularly vulnerable during this crisis.”
Lawmakers who signed the letter included House Financial Services Chairwoman Maxine Waters (D-Calif.), House Small Business Chairwoman Nydia Velázquez (D-N.Y.), Senate Small Business ranking member Ben Cardin (D-Md.) and Senate Banking ranking member Sherrod Brown (D-Ohio).
The request underscored concerns that hundreds of billions of dollars in aid would fail to reach multitudes of some of the most vulnerable small businesses and their employees. The worries were compounded by the fact that large companies and firms with access to other forms of financing were able to secure the government-backed loans before the first round of funding was exhausted.
The loans are enticing because they carry a 1 percent interest rate and can be forgiven if businesses maintain their payrolls for eight weeks.
Banks were growing increasingly frustrated with the Trump administration over its hurried and rocky rollout of the Paycheck Protection Program. Treasury has taken the position that the latest round of funding will be enough to meet demand, which banks say is unrealistic based on the vast number of applications.
Treasury Secretary Steven Mnuchin has said he expected this to be the “last tranche” of funding. Behind the scenes, Mnuchin and other Treasury officials have also told banks they believe it will be enough money, sources familiar with the matter said. A Treasury spokesperson said Saturday that the total funding for the program is expected to cover 60 million workers, which is the department’s estimate of the employment of small businesses.