Wells Fargo told customers who were still in line for an emergency small business loan that due to the backlog it faces, they should consider applying with another bank.
The company issued the warning in an email to customers on Friday, just two days after the Federal Reserve lifted the $ 1.95 trillion asset cap it imposed on Wells Fargo in 2018. The The Fed made the move so the bank can make more paycheck protection program loans to small businesses that have suffered an economic blow from the coronavirus outbreak.
Wells, blaming the asset cap, stopped receiving claims early last week under the $ 349 billion program overseen by the Small Business Administration and Treasury Department. After the Fed lifted the cap on April 8, Wells reopened its online portal and again began accepting “expressions of interest” in the SBA loan program.
Email to customers was reported by the San Francisco Business Times Friday. Separately, a Wells Fargo customer provided a copy of the email to American Banker.
Although Wells said it is processing applications in the order they are received, the bank told customers in the email that they “may be able to apply elsewhere” for a PPP loan.
“Although you will stay in the queue depending on when you submitted your initial interest, due to high demand we are unable to start your application at this time,” the e- mail.
“You stay in our queue. However, since there is a limited amount of SBA approved funds for the Paycheck Protection Program, we want you to know your options, ”the email continued. “You may want to apply elsewhere to increase your chances of getting a loan before funds run out. “
Wells isn’t alone in being inundated with SBA apps. The SBA program has been marred by chaos since it opened on April 3.
The American Bankers Association said in a report on April 12 that 205 billion dollars of the 350 billion allocated to the PPP have already been claimed. The figure includes requests that banks have processed and approved by the SBA, although customers may not have received the funds yet.
Last week, Treasury Secretary Steven Mnuchin asked for an additional $ 250 billion to replenish the emergency loan program due to the huge demand.
A Wells spokeswoman said Monday that customers who have filled out an expression of interest are in the queue, waiting their turn. Wells said it received 170,000 requests in the first two days of the program.
“We are committed to helping as many small businesses as possible given the realities of this unprecedented situation and the huge interest in PPP,” the spokesperson said.
To be eligible, customers must have a Wells Fargo business checking account as of February 15, 2020, be enrolled in online business banking, and meet SBA program requirements.
For more than two years, Wells has been barred from growing its assets above $ 1.95 trillion. The Fed imposed the asset cap on Wells following a series of scandals, including revelations that employees opened millions of accounts receivable without authorization.
All of the proceeds Wells Fargo derives from the additional support for the SBA program and the Main Street Loan Program for Midsize Businesses will go to the Treasury or to a nonprofit that helps small businesses, the Fed said.