Yahoo Finance JPMorgan Will Only Accept Small Business Loans Under Federal Scheme, Suspends All Others
Other than loans under the Paycheck Protection Program, JPMorgan Chase & Co. (NYSE: JPM) will not accept any other small business loan applications until further notice.
What Happened
JPMorgan’s consumer head Gordon Smith informed President Donald Trump on Tuesday the bank had received more than 375,000 requests for $40 billion in loans under the $350 billion Paycheck Protection Program (PPP).
This is more loan requests than at any other bank, the Financial Times reports.
The loans are attractive because businesses can borrow up to $10 million, which will be forgiven if the borrower proves the loans paid wages and other approved expenses, making the loans more favorable than other short-term financing options.
JPMorgan said the bank was devoting all of its small business loan resources to the processing of PPP loans and had “temporarily suspended” work on other applications, according to a spokesperson.
Why It Matters
Smith revealed that requests for PPP loans have ranged from $4000 to $2.6 million. Other banks have been flooded with applications as well.
According to the CEO of Bank of America Corp (NYSE: BAC) Brian Moynihan, it has received 250,000 applications for PPP loans since the launch on Friday. This translates into several thousand applications per hour, with 3000 employees currently processing these loan requests, reported Forbes.
On Wednesday the Secretary of the Treasury Steven Mnuchin, urged the release of more funds for the small business loan program in a tweet.
Senator Marco Rubio warned on Twitter that at the current pace, money allocated for the PPP program would run out by June 6.
This week Jamie Dimon, CEO of JPMorgan, wrote a letter to shareholders revealing the bank had already lent $950 million in the past 60 days to small businesses.
The bank would continue processing non-PPP applications already in the pipeline and would explore the issue of new applications next week, according to FT.
What Else Is There
Wells Fargo & Co. (NYSE: WFC) restricted its contribution to $10 billion for the PPP program. After launching its portal last week, the bank reached capacity within one day of the commencement of the federal funding program for small businesses.
The bank said it would give preference to loans for non-profits and businesses with less than 50 employees.
Price Action
JPMorgan shares traded 0.54% higher at $94.81 in the after-hours session on Thursday. The shares had closed the regular session 4.04% higher at $94.30.
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