Those looking for a loan outside of the government’s Paycheck Protection Program (PPP) won’t find it from JPMorgan Chase, which has decided to focus solely on that program due to a huge amount of requests over the past few days, according to the Financial Times.
The bank, which is the largest in the U.S., said it has seen over 375,000 requests from small- to medium-sized businesses (SMBs) since the $350 billion loan plan from the federal government was officially launched.
Because of the huge increase, the bank will only be focusing on disbursing loans related to that project. The bank said it is processing loans already submitted, and next week would begin to look at those which came in new.
However, JPMorgan’s decision is affecting businesses that are still connected to the crisis but not looking for PPP loans. Grove North Ventures, an incubator trying to make more N95 ventilators to help those hospitalized with the virus, was told it would have to look elsewhere because the loan it wanted was not part of the stimulus program.
The stimulus loans are guaranteed from the federal Small Business Association (SBA) and will cover about 2.5 times what a business makes as a wage bill, only applying to businesses which employ less than 500 people. The endgame is for those SMBs, most of which have had to close or drastically reduce operations to prevent the spread of the coronavirus, to be able to continue to pay employees and keep the lights on while social distancing and lockdown rules are in effect.
The loans will be forgiven for those who can prove they used the money to pay their employees during the shutdown.
Among other top banks, Wells Fargo won its battle to lift the cap on its balance sheet (placed there in the wake of the fake account scandal from 2018), so it has resumed PPP operations as of Wednesday (April 8). Bank of America has more than 240,000 applications so far, and Citi has yet to start its operations.