Washington, D.C. – U.S. Senator Ron Wyden, D-Ore., today urged the U.S. Department of the Treasury to do everything in its power to reassure U.S. banks and lenders that they are adequately prepared to provide relief to America’s small businesses during the COVID-19 pandemic.
Today is the first day small businesses are eligible to apply for emergency loans through the Payment Protection Program established in the recent Coronavirus Aid, Relief, and Economic Security (CARES) Act. Large and small banks and lenders in Oregon and across the country, however, have stated they are not yet able to issue the loans needed to implement the Payment Protection Program due to uncertainties regarding the lending program and a lack of clarity from both the Small Business Administration (SBA) and the Treasury Department. These uncertainties include the extent to which banks and lenders will be expected to vet businesses before approving loans and distributing funds, and the degree to which they will be held liable for any errors in the vetting process.
“Given Administration statements and guidance creating a verification process to be completed by the loan issuer, banks and lenders are concerned that they could be held liable for a borrower that obtained a loan by presenting misleading or inaccurate certification information,” Wyden wrote. “It is not difficult to imagine a scenario in which such fear could lead to substantial delays in issuance of critical loans, or even, outright rejection of smaller, lesser-known businesses. Already, reports indicate that large banks are rejecting potential loan applicants and redirecting them towards other banks and lenders with whom they might have a pre-existing relationship. For far too many of America’s small businesses, this is simply not an option.”
Wyden asked that Treasury clarify the verification process for borrowers and reiterate that both the Treasury Department and the SBA guarantees 100% of the outstanding balance of these loans, and that guarantee is backed by the full faith and credit of the United States Government.
A full copy of the letter can be found here.
A web version of this release is here.