At least three The big banks have decided to abandon the new payroll protection loan process forgiven directly by the Small Business Administration, The Intercept found, leaving their small business clients no choice if banks refuse to forgive loans or delay loans. process.
According to emails sent by The Intercept, Bank of America, JPMorgan Chase and PNC decided to opt out.
They are key contributors to a program that Congress created to offer loans to businesses to pay wages and other qualified expenses to help them get through stoppages. As of the end of MayJPMorgan Chase was the largest PPP lender, followed by Bank of America in second place; PNC number 11. Overall, according to the SBA, lenders representing only half of all outstanding PPP loan forgiveness applications participated.
PNC recently sent an email to Jesse Grund, owner of Unconventional Strength personal training studio in Orlando, Florida, saying, “Considering that we have already created an optimized end-to-end digital portal and associated verification process for your PPP forgiveness application; we will stop using the SBA forgiveness portal. “
Grund still has not received a pardon for the $ 5,000 loan, and instead, PNC reported that its “Correct Maximum Loan Amount” is only 917 dollarsleaving it on the hook for everything else. “It’s PNC’s fault that I received this money,” he said. “Now you guys want to answer me for this.”
At the start of the pandemic, small business owners were called upon to join the Payroll Protection Program. The loans were made with the promise that they would be forgiven and would, in effect, turn into grants if used properly.
But many small business owners struggled to get their loans forgiven banks that issued them. Banks were encouraged to issue PPP loans through fees they generated, but they don’t get any forgiveness fees, and they are dragging their feet. Of the total number of issued PPP loans, less than half forgiven so far.
In response, the Small Business Administration, the government agency tasked with running the program, announced at the end of July, he will offer small business owners with PPP loans of $ 150,000 or less a way to bypass hard-line banks and ask for forgiveness directly from the agency. Congress one day late last year counts automatically forgives all loans less than $ 150,000, but never completes repayment.
But a recent SBA statement was in a small print that many may have missed: banks do have to choose a direct process for small business owners to access it. And at least three main ones refused.
“Forcing creditors to participate in the process could have a devastating effect,” SBA spokesman Terrence D. Clarke said in an email. He noted that lenders continue to agree and that the agency is conducting outreach to encourage them to participate. “[W]We communicate with creditors on a daily basis, ”he said. In a statement, Patrick Kelly, Deputy Administrator of the SBA Capital Access Authority, said: “We urge all lenders to subscribe to this tested portal.”
When asked to explain why the bank decided to prohibit its clients with direct forgiveness from the SBA, a PNC spokesman pointed out statement what did you say: “[L]Members who participate in the SBA Forgiveness Portal remain responsible for reviewing and issuing SBA forgiveness decisions. Thus, we will still need to ensure that borrowers meet the loan and loan forgiveness requirements, whether we choose to use the SBA forgiveness portal or not. ”
In correspondence with customers, Chase did not provide any explanation. The email sent to the small business owner simply said, “[W]We continue to follow our simple process and are not participating in the new direct SBA program. ” In response to a request for comment, a Chase spokesperson said via email, “Chase customers must submit their forgiveness applications through our platform,” adding, “We have a simple process that takes less than 10 minutes.”
For some business owners, being disconnected from the direct SBA program may mean that they cannot get forgiven for some or all of their loans at all. Some banks in recent months have contacted small business owners and telling them that they shouldn’t have received the initial amount they received – which the banks themselves approved – and the requirement that the owners pay the difference. But many told The Intercept that they used the money correctly and fully expected their loans to be forgiven.
This is exactly what happened to Warren Davis, the owner of Warren Davis Consulting, LLC, who received a loan from Chase, and was recently told that the bank would not allow him to ask for forgiveness directly from the SBA. After the bank initially gave him a $ 6,812 PPP loan, he was later told that he was only entitled to $ 1,795.53 in forgiveness. He now has to pay Chase $ 460.01 on the first of every two-year month to pay off the remainder of the loan. “This loan payment is the second largest payment I currently have, besides my rent, which is also due on the 1st,” he said in an email. “I tried many times to get answers from Chase, but without success for several months.”
In response to situations like Davis’, a Chase spokesman said, “Small businesses must meet standards to be eligible for forgiveness, whether they go through their lender or directly through the SBA.”
When asked why Bank of America dropped out, spokesman Bill Holldin said, “Because our portal has been simplified and has been around for six months,” adding that if the bank agrees, “we’ll have to develop a new interface.” The bank is considering joining the SBA process, but “for now, our simplified portal provides what people want,” he said.
But this portal doesn’t provide what Amy Yassinger needs. Yassinger, the owner of a music company that offers music bands for weddings in Illinois, was advised by Bank of America to apply for a PPP loan at the onset of the pandemic. The bank helped her with this process by reassuring her that its underwriting team “will make sure everything is in order,” she said in an email. She used $ 38,730 to pay employees as if they were following their regular action plan, despite widespread cancellations, and to cover some non-payroll costs.
However, 11 months after she received the loan, the bank told her it would send just $ 2,436 to the SBA for forgiveness. “It’s one thing to completely ruin my life for more than a year, as my company was forced to cancel or postpone more than 60 events in 2020,” she said. “It’s another matter when Bank of America wants to return $ 36,000 out of $ 38,730 over the next 5 years.”