Giant small business program poses herculean challenge for US banks
New York: After laying off almost all of his workforce across seven stores, Legacy Toys owner Brad Ruoho sees a path to rehiring them only if the new $350 billion US small business lending program performs as promised.
Passage of the giant US relief package that includes the program "enabled us to feel more confident about bringing on extra help,” said Ruoho, whose Milwaukee-based chain has already re-hired 10 of 75 employees to support a growing e-commerce push.
Ramping up the massive program will be a herculean task for the Small Business Administration (SBA) and for the nation’s banks during a period of skyrocketing unemployment.
Signs were mixed by Friday afternoon, with the biggest US banks at various stages of rolling out their programs and the status of many lenders changing by the minute.
There are also questions on everything from bank money laundering rules to how fast loans could be issued from lenders not previously part of the SBA programs. On top of that were nitty-gritty details about forms and documentation.
The SBA on Twitter pointed to huge interest in the program — with more than $2 billion in loans around 1900 GMT — but it wasn’t clear how quickly those funds would flow to companies that face immediate cashflow problems.
Jim Friedlander, president of New York-based Arrangements Abroad which organizes vacation packages, fears the funds may not arrive in time to avoid laying off some of his 32 employees.
"The government to its credit is trying to do something fast and big and you do want to be careful to avoid fraud,” Friedlander said. "But it is helpful to have clear information so you don’t have the expectation that the money is going to come right away.” – AFP