FirstBank presses pause button on emergency business loans after flood of applications – The Denver Post
Faced with an overwhelming volume of emergency loan applications, FirstBank has temporarily stopped supporting applications under the Paycheck Protection Program through the US Small Business Administration.
PPP loans are designed to act as a lifeline for small businesses with fewer than 500 employees until the economy reopens. A survey by the National Federation of Independent Businesses found that 70% of small businesses had requested or attempted to seek emergency help. Of those who did not, half had planned to do so.
PPP loans officially launched on April 3, and FirstBank waited for further advice from the Treasury Department and the SBA before accepting applications on Monday. In 72 hours, he had received more than 15,000 requests for funding of approximately $ 2 billion.
To manage the demand, FirstBank said it had recruited hundreds of employees to work in split shifts around the clock. Despite this, the bank was unable to keep up and took a break to catch up.
“We must temporarily suspend all new PPP SBA applications to focus on closing and funding current and approved loans,” the bank said in a statement. The plan is to reopen the app portal by noon on April 14, said Chandra Brin, the bank’s public relations manager.
On Monday, April 13, the bank was able to reopen its portal and start accepting applications with what it described as an improved system and process.
FirstBank, with approximately 100 branches in Colorado, is the second-largest depository in the state after Wells Fargo. Over the past 30 years, she has issued $ 600 million in SBA loans. This week alone he received more than three times that volume.
Wells Fargo had to end P3 loans after quickly hitting growth limits imposed by regulatory orders that followed its fake account scandal. The Federal Reserve stepped in to give Wells Fargo more leeway to grant emergency loans.
The fact that the state’s two largest banks are offline or forced into new apps could make it more difficult for freelancers, independent contractors and gig workers who were allowed to start applying for loans on Fridays. April 10.
“Banks are working as hard as they can and as fast as they can, at night and on weekends, to process and disburse PPP funds to businesses. This is an unprecedented time for bankers and borrowers, ”said Amanda Averch, spokesperson for the Colorado Bankers Association.
The Paycheck Protection Program received an unprecedented $ 349 billion CARES allocation of $ 2.2 trillion. But the program is first-come, first-served, and struggling small business owners, worried the money would run out, rushed to apply to their banks.
Congress is working to add an additional $ 250 billion to P3, but that effort has stalled. Some industry groups argue that more is needed. On Friday, the US Travel Association called for an allocation of $ 600 billion, as well as a lifting of the requirement that 70% of loans be used for salary expenses.
With travel spending down 85%, the association estimates that up to 15.8 million jobs in the industry are at risk. The issue for many now is not keeping workers on the payroll, but surviving long enough to be there to hire workers once the restrictions are lifted.
“The CARES Act was an ambitious step, but now the pressing problem is that aid is just not getting where it needs to go,” Roger Dow, CEO of the US Travel Association, said in a statement. “Major adjustments and more aid are needed immediately to support small businesses, including local nonprofits, which are critical engines of the travel economy.”