Why small business loans for COVID-19 relief may be delayed
Banks are bracing themselves for wave of applications for the crisis small business loan program set up in the $2 trillion federal stimulus. It’s supposed to start today, but some big banks say they’re not ready.
Marketplace’s Nancy Marshall-Genzer explains the problem. The following is an edited transcript of her conversation with “Marketplace Morning Report” host David Brancaccio.
Nancy Marshall-Genzer: Small businesses will be applying for these loans through banks. And the banks have been waiting for final guidelines from the federal government on exactly how the small business loan program will work. Those guidelines went out last night, just hours before the program was supposed to start. It looks like there’ll be delays at even some of the biggest banks. A message on the JPMorgan Chase website says it’s not accepting applications at this time. Bank of America’s website says its small business clients can apply for the loans quote once final guidelines are released. Wells Fargo isn’t accepting applications yet either.
David Brancaccio: Why did the guidelines take so long?
Marshall-Genzer: This is a complicated program. It’s going to be administered by banks, and they had complaints. Small banks said the interest rate was too low. So the Treasury Department raised it. Other banks are worried about liability if a business lies on the loan application. The banks are supposed to verify that the business has been up and running for the last few months, and paying its employees.
Brancaccio: And how much money are we talking about here?
Marshall-Genzer: It’s about $350 billion. There’s some concern that more established businesses will snap that up, squeezing out the smallest ones. But Treasury Secretary Steven Mnuchin says he’ll ask Congress for more money if the $350 billion runs out.
COVID-19 Economy FAQs
Millions of Americans are unemployed, but businesses say they are having trouble hiring. Why?
This economic crisis is unusual compared to traditional recessions, according to Daniel Zhao, senior economist with Glassdoor. “Many workers are still sitting out of the labor force because of health concerns or child care needs, and that makes it tough to find workers regardless of what you’re doing with wages or benefits,” Zhao said. “An extra dollar an hour isn’t going to make a cashier with preexisting conditions feel that it’s safe to return to work.” This can be seen in the restaurant industry: Some workers have quit or are reluctant to apply because of COVID-19 concerns, low pay, meager benefits and the stress that comes with a fast-paced, demanding job. Restaurants have been willing to offer signing bonuses and temporary wage increases. One McDonald’s is even paying people $50 just to interview.
Could waiving patents increase the global supply of COVID-19 vaccines?
India and South Africa have introduced a proposal to temporarily suspend patents on COVID-19 vaccines. Backers of the plan say it would increase the supply of vaccines around the world by allowing more countries to produce them. Skeptics say it’s not that simple. There’s now enough supply in the U.S that any adult who wants a shot should be able to get one soon. That reality is years away for most other countries. More than 100 countries have backed the proposal to temporarily waive COVID-19 vaccine patents. The U.S isn’t one of them, but the White House has said it’s considering the idea.
Can businesses deny you entry if you don’t have a vaccine passport?
As more Americans get vaccinated against COVID-19 and the economy begins reopening, some businesses are requiring proof of vaccination to enter their premises. The concept of a vaccine passport has raised ethical questions about data privacy and potential discrimination against the unvaccinated. However, legal experts say businesses have the right to deny entrance to those who can’t show proof.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.
Donate now to get almost any thank-you gift.