For the first time since a small business loan program was launched, small lenders have been moved to the front of the line.
On Wednesday (April 29) the U.S. Treasury Department and the Small Business Administration (SBA) said they will temporarily exclude big banks from the loan portal used to submit applications for the SBA’s Paycheck Protection Program (PPP) for eight hours. It is scheduled to start on Wednesday (April 29) at 4 p.m., according to an email obtained by CNBC.
The Treasury defines “big” as any lender with more than $1 billion in assets.
These agencies say they want to “to ensure access to the PPP loan program for the smallest lenders,” according to the email. “SBA and Treasury will evaluate whether to create a similar reserved time again in the future.”
The SBA’s move follows criticism that the first round of the $310 billion program that opened on April 3 was intended to get money into the hands of the small businesses. Instead, national franchises, publicly traded companies and preferred bank customers got the funds.
The Los Angeles Lakers was the latest entity to return its PPP loan money after learning the fund was quickly depleted and left the most desperate of businesses on the sidelines.
On Tuesday, (April 28) Treasury Secretary Steven Mnuchin said he never expected the team would take a multi-million-dollar federal loan intended to help small businesses stay afloat amid the COVID-19 pandemic.
“I’m a big fan of the team, but I’m not a big fan of the fact that they took a $4.6 million loan,” Mnuchin told CNBC’s “Squawk Box,” adding, “I think that’s outrageous and I’m glad they returned it, or they would have liability.”
In the same interview Mnuchin said that any SBA PPP loan over $2 million will be audited by the agency before it is forgiven. On Tuesday night, he told The Wall Street Journal every business that gets a loan should expect an audit.