US, WASHINGTON (ORDO NEWS) — The U.S. Small Business Administration has restricted banks from issuing emergency loans to support companies affected by coronavirus. Each lender can give a total of no more than 10% of the total amount of necessary financing under the program, the main purpose of which is to help companies pay salaries to employees during periods of inactivity.
The agency explains the restrictions introduced by the unprecedented demand for loans, observed against the backdrop of the fight against the coronavirus pandemic.
As reported Reuters, about 5 thousand lenders, including large banks such as JPMorgan Chase & Co and Citigroup Inc, have already participated in the previous round of financing allocation of $ 349 billion. Moreover, all funds allocated by the government dispersed in just 2 weeks.
At the same time, the program, as well as the lenders themselves, were subjected to a flurry of criticism: access to borrowed funds was granted to large corporations with a turnover of hundreds of millions of dollars, while small and medium-sized businesses were left with crumbs. In many states, SMEs have not seen the promised assistance.
Critics of the program indicate that funding was allocated on a “first come, receive” basis, in which major players had much more opportunity to respond quickly. The presence of credit history also played a special role: many small borrowers simply did not have it, which slowed down the consideration of their applications and left them without money. Reuters analysis showed that 25% of the total allocated funding went to only 2% of companies.
The US authorities urgently approved another package of assistance to business, and, as expected, it is small. However, experts believe that this money will go even faster, because tens of thousands of applications are already under consideration by banks.
Meanwhile, there are already signals that the printing press in the United States will continue to work without interruption. Donald Trump’s economic adviser Kevin Hassett has already warned of an unprecedented crisis and announced that the White House intends to consider new incentives.
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