US companies seek coronavirus fund as bailout plan unfolds

US businesses are seeking coronavirus bailout fund after days of confusion prevailing in the disbursement. The desperate owners of tens of thousands of companies - many shuttered for weeks due to the virus outbreak - inundated lenders on Friday amid frustration that basic details, including the interest rate and application form, were still being finalised less than 12 hours before the programme launched.

The loan programme, part of a $2 trillion economic rescue package, is aimed at businesses with about 500 employees, a segment that contributes more than 40% of US GDP and employs some 60 million people. The pandemic has prompted a majority of US states to order non-essential businesses closed and residents sequestered at home to combat the infection’s spread.

Like many small business owners, New York City restaurateur Dan Kluger spent his Friday scrambling to apply for a loan under the US government’s $349 billion small business bailout fund, which officially launched in the morning.

Kluger’s regular banker at First Republic Bank had told him on Thursday it could not process his application due to uncertainty over the programme’s terms, as Trump administration officials were still tweaking the details as late as Thursday night. But the bank alerted him on Friday that he would be able to apply after all.

“It’s emotionally draining,” said Kluger, who was forced to lay off 122 staffers. “It’s a really constant sense of not knowing what’s next at an already stressful time.” “It’s not like you just snap your fingers and, ‘Oh, let’s start offering this brand new loan product where we just found out the interest rate yesterday,’” said Scott Pearson, a lawyer at Manatt, Phelps & Phillips who advises banks on compliance.

From the first hours of the morning, there were signs the rollout would be somewhat rocky, even as administration officials boasted about its success.

Community bankers took to Twitter to complain they were unable to access the Small business Administration’s (SBA) system. Bank of America Corp was the only big bank accepting applications for the first few hours, though JPMorgan Chase & Co joined in around noon.

The US Treasury was still issuing updated guidance and form templates to the banking industry, according to Treasury emails seen by Reuters.

“Our bankers worked literally throughout the night,” said Richard Hunt, chief executive of the Consumer Bankers Association. “Normally this would have taken a year to implement, but we’re trying to implement it over the weekend.”

Reuters