SBA temporarily shuts out big banks and businesses from Paycheck Protection Program
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Big businesses — with the aid of big banks — have gobbled up some of the money from the rescue loans that were supposed to go to small businesses during the COVID-19 pandemic.
Regulators tried to address that issue with the latest round of funding released this week — by giving the big banks a timeout. The banks were shut out for a time from applying after getting flack for favoring bigger clients.
Here’s how the lockout worked: Small businesses go through their banks to get these loans. They fill out the application, and the bank processes it through an online portal with the Small Business Administration.
“The SBA basically set aside eight hours — 4 p.m. EST until midnight [Wednesday] night — just for smaller banks, presumably with smaller business clients, so they’d get a chance to get through the system and get loans approved,” Marketplace’s Nova Safo said.
Mehrsa Baradaran, a banking law expert at the University of California, Irvine, said the move amounts to a slap on the wrist for big banks, but could have unintended consequences.
“Maybe a little bit on the margins it might help a few more small businesses get money before the big businesses come in,” she said. “But a lot of small businesses have accounts at Wells Fargo and Citi and, so you may end up hurting some small businesses.”
Big banks are, of course, not happy about all of this. The head of one banking association said the SBA would be better off fixing its approval system.
Banks have been complaining about that online portal that they have to use to process loans. They say it’s glitchy and causing delays.
According to one banking group, almost 1 million loans have been processed so far in this second round of funding, so there’s some progress.
COVID-19 Economy FAQs
What’s going on with extra COVID-19 unemployment benefits?
The latest: President Donald Trump signed an executive action directing $400 extra a week in unemployment benefits. But will that aid actually reach people? It’s still unclear. Trump directed federal agencies to send $300 dollars in weekly aid, taken from the federal disaster relief fund, and called on states to provide an additional $100. But states’ budgets are stretched thin as it is.
What’s the latest on evictions?
For millions of Americans, things are looking grim. Unemployment is high, and pandemic eviction moratoriums have expired in states across the country. And as many people already know, eviction is something that can haunt a person’s life for years. For instance, getting evicted can make it hard to rent again. And that can lead to spiraling poverty.
Which retailers are requiring that people wear masks when shopping? And how are they enforcing those rules?
Walmart, Target, Lowe’s, CVS, Home Depot, Costco — they all have policies that say shoppers are required to wear a mask. When an employee confronts a customer who refuses, the interaction can spin out of control, so many of these retailers are telling their workers to not enforce these mandates. But, just having them will actually get more people to wear masks.
You can find answers to more questions on unemployment benefits and COVID-19 here.
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