Chase warns PPP candidates against massive demand
JPMorgan Chase tells some customers asking Paycheque Protection Program (PPP) that they might have more success applying elsewhere, CNBC reports. Chase’s warning came in anticipation of President Trump’s $ 484 billion coronavirus relief plan sign in law Friday, 310 billion dollars of which will reconstitute the PPP.
The bank ranked applicants based on where they are in its processing queue, and sent an email to those who were still at the start of the process: “Your application is at the step 1, with an extremely high volume of applications before yours. We wanted to give you that information, so you can decide if you want to try applying with another lender. ”Chase has received applications totaling $ 40 billion since the program launched in early April.
The 350 billion dollars initially allocated to the PPP were impoverished within two weeks, and many are concerning this will happen again, given the huge backlog of applications – so it is important for banks to set clear expectations among applicants.
Banks see a daily volume of $ 50 billion in applications – a level of demand that PPP would need closely 1000 billion dollars satisfied. Some experts have said the funding may only last a few days given the volume of existing requests banks already have to process. “Most if not all of the funding that Congress is currently considering is already exhausted,” by Nick Simpson, spokesperson for the Consumer Bankers Association.
The new funding allocates about a third of the funds to smaller lenders like community banks and
, but they are also supported by apps: small banks have noted they do a whole year of loans in a weekend. Meanwhile, it’s not clear at this point whether Congress would provide a third round of funding – and without it, it’s likely that thousands of small businesses still won’t have access to relief loans.
While Chase’s approach is not a solution to these concerns, we believe its transparency is a good thing, as it will help temper customer expectations. The actual financing channeled through the PPP is not under the control of the banks, but they are still criticized for its shortcomings: it is the banks that process and disburse the loans, and they are expected to raise billions in. the fees that The Business Association will pay to facilitate them. Besides the huge volume of applicants, the PPP was initially presented as a same day loan, which did not bear fruit.
We have seen customer frustration manifest in lawsuits accusing some major U.S. banks of to give the priority larger loan applicants to generate higher fees or Processing their own customers first. Chase’s decision to set more realistic expectations may thus help alleviate some of the feelings of abuse among clients. By anticipating this frustration and working to mitigate it proactively, Chase might elicit less anger than if he made too many promises for quick loan facilitation or did not openly communicate about these issues.
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