In theory, the government’s efforts to save jobs by indemnifying small- and medium-sized businesses for payroll costs begins today. The $2.2 trillion CARES Act contained $349 billion for the Paycheck Protection Program, a loan process that amounts to free money for businesses who keep employees on the job throughout the coronavirus crisis. With time of the essence, Treasury has enlisted banks to determine which businesses qualify for such loans, and the starting gun fired off this morning on applying for the money.
In theory, that is. In reality, some banks are balking at accepting applications and others at processing them until Treasury explains more clearly how to qualify applicants:
The $349 billion Paycheck Protection Program is a key element of the $2 trillion economic rescue package passed by Congress last week. Administration officials have said money from the emergency loan fund will start flowing to small businesses affected by the coronavirus outbreak Friday, delivering a sharply streamlined, same-day approval process unheard of in the history of federally backed small-business lending.
But JPMorgan Chase, the country’s largest lender, said Thursday it did not expect to begin accepting applications for the program Friday, as scheduled. Other banks said they were accepting applications but didn’t expect to process or approve them until after the Treasury Department and Small Business Administration finalize rules for the program.
Some banking officials have warned that the abbreviated review process ― which allows borrowers to attest to their own eligibility without the government’s approval ― will make the program a magnet for fraud. Although the SBA will be able to audit lenders and borrowers later, it will fall primarily to private bankers to make decisions about who should receive taxpayer-backed loans.