On the eve of the scheduled launch of a $350 billion program to help small businesses in the face of the coronavirus pandemic, key details of the plan remain in flux. U.S. Treasury Secretary Steven Mnuchin raised the interest rate on the program loans by 50 basis points, and the nation's biggest bank said it will likely not be ready to start accepting applications by April 3.
The Paycheck Protection Program, which was authorized under the federal government's $2 trillion coronavirus relief package, would deliver urgently needed assistance to small businesses and their employees. The Treasury Department, the Small Business Administration, which will oversee the program, and lenders are hustling to be ready for its launch date, just a week after the "Phase 3" coronavirus relief legislation was enacted. Banks are concerned both about the degree to which they will be responsible for vetting borrowers and their own liability if things turn bad.
On April 2, JPMorgan Chase & Co. said it will likely not be ready to take applications on Friday.
"Financial institutions like ours are still awaiting guidance from the SBA and the U.S. Treasury," the bank said in a statement posted to its website April 2. "As a result, Chase will most likely not be able to start accepting applications on Friday, April 3, as we had hoped."
"Make no mistake — we will help you, our customer, with getting access to these emergency funds," JPMorgan added. "And we will make it as easy as possible for you to get these funds quickly. We hope to have the guidance we need from the government soon so that we can begin assisting you."
In a late-afternoon press conference on April 2, Mnuchin announced an increase to the interest rate to be paid on Paycheck Protection Program loans to 1% from the originally planned 0.50% after smaller community banks voiced concerns about deposit costs.
"To make this attractive for community banks, we have agreed to raise the interest rate," Mnuchin said.