When Fathom Unlimited Inc. in need of financial help in April as the pandemic led to a loss of customers, founder Pavia Rosati turned to her bank, A capital letter Financial Corp., for assistance, The Wall Street Journal (WSJ) reported.
But the New York consultancy was alone as Capital One was not ready to accept applications for the Paycheque Protection Program (PPP) when it was launched.
Worse yet, no one offered a helping hand, she told the WSJ. A bank employee referred her to Capital One’s toll-free hotline.
That was it. Rosati has changed banks.
“Why would I work with a bank that was so useless to me when I needed it? She told the WSJ.
It turns out that Capital One was not alone in being unable to provide part of the $ 650 billion in forgivable loans to small and medium enterprises (SMEs) for payroll and other disbursements during the shutdowns. .
Instead of lending money directly to businesses, the Small Business Administration (SBA) allowed banks to distribute the money.
In a July survey of 931 companies that received PPP loans, Barlow Research Associates, the Minneapolis-based banking market research firm, found that among companies that received PPP financing, 28% received their loan from a lender with whom they had no previous relationship. or a bank that wasn’t their primary. According to the survey, around 44% of these SME borrowers said they would transfer at least part of their business to the bank entrusted to them during the PPP.
Rosati obtained a $ 30,000 PPP loan from a financial technology company and transferred the funds to Grasshopper Bancorp Inc., a New York-based banking startup that launched last year.
Capital One told the WSJ that its SBA loan portfolio is small, but is working overtime to process P3 requests. The bank said it had financed more than 14,000 PPP loans as of July 1.
Doida Law Group LLC, based in Greenwood Village, Colo., Moved its business from Wells fargo & Co. at InBankshares Corp. in Denver after the smaller lender secured a $ 90,000 PPP loan, the WSJ reported.
Stan Doida, the company’s managing counsel, told the WSJ that Wells Fargo did not immediately agree to PPP requests, and he panicked when rumors spread that the initial $ 350 billion in PPP funds were almost exhausted.
A spokesperson for Wells Fargo said delays have been created due to its volume of requests and changing government requirements.
Last month, PYMNTS reported The PPP lifeline for SMEs approved 4.9 million loans worth more than $ 521 billion. The agency estimated that 87% fell below the threshold of $ 150,000, with an average of $ 107,000.