NC Banks CEO has questions about new deal that includes $310B for small businesses

RALEIGH – As leaders in the US Senate moved Tuesday toward agreement of another $310 billion for small business loans, the head of the NC Bankers Association likes some of what he’s reading but still has questions about the deal.

“Congressional leadership and the Trump administration reached a deal today on legislation approving an additional $484 billion for coronavirus relief and Paycheck Protection Program (PPP) funding,” Peter Gwaltney, the Chief Executive Office of the NC banking group said.

“$310 billion is appropriated for the PPP, with $60 billion allocated for lenders with less than $10 billion in assets (community banks, CDFIs (Community Development Financial Institutions), credit unions, CDCs). … The bill is expected to pass the Senate this afternoon and we believe it will be voted on in the House on Thursday.”

The Senate did pass the package Tuesday afternoon, CNBC reported.

The House aims to approve the bill by Thursday, CNBC added.

The original $349 billion in funding ran out last week with North Carolina businesses getting some $8 billion spread across nearly 40,000 business and with an average loan amount of $244,000.

But the program has been criticized for some $300 million going to larger companies, the technical challenges at the U.S. Small Business Administration and the U.S. Treasury Department had in launching the program, and the lack of clarity about rules for the program. Another critism was that large banks such as Bank of America dominated the program.

Big banks sued

Four of America’s biggest banks have been accused of harming thousands of coronavirus-hit small businesses by unfairly prioritizing emergency loan requests from large customers to earn fatter fees, CNN reported Tuesday evening.

Bank of America, Wells Fargo, JPMorgan Chase and US Bank were sued Sunday for allegedly failing to process forgivable loans in the $349 billion Payroll Protection Program (PPP) on a first-come first-served basis.

Each bank “concealed from the public that it was reshuffling the PPP applications it received and prioritizing the applications that would make the bank the most money,” each of the four lawsuits said.

As a result of this “dishonest and deplorable behavior,” the lawsuit said thousands of small businesses “were left with nothing” when PPP ran out of money earlier this month.

Questions persist

The $60 billion directed to smaller banks might help address that issue.

However, other challenges remain, Gwaltney said.

“We are working to learn when PPP loan processing will resume, but we’ve been told that it could be as early as Friday,” he explained.

“We will continue to seek clarity on this, and will let you know the minute we hear something.”

Also bankers continue to ask questions about the PPP process.

“We are still waiting for guidance on the many questions the banking industry has submitted to Treasury, including the 10-Day Rule, time and process for payment of origination fees, forgiveness, and much more,” Gwaltney said.

“We are watching closely for the guidance, and will send it to you just as soon as it’s released.”