“There are some banks who are actively trying not to take applications and to minimize the number of loans they make through the program,” says investor Mark Cuban. “This is despite the fact that it pays a five percent commission for the loans made on the small businesses. It might take the Treasury Department really pushing some banks who were unwilling participants to start to push some loans out there.”
Mega entrepreneur Mark Cuban discusses the difficulties with the launch of Paycheck Protection Program (PPP) designed to help small businesses in an interview on CNBC:
Some Banks Actively Not Taking PPP Loan Applications
You have got to execute on what you’ve already promised obviously. Small businesses have been told that this (PPP forgivable loan) was coming since the legislation was passed more than almost two weeks ago. The rush was more than the banks were able to handle. The banks have just got to do their job.
Part two to that is I think there are some banks who are actively trying not to take applications and to minimize the number of loans they make through the program. This is despite the fact that it pays a five percent commission for the loans made on the small businesses. It might take the Treasury Department really pushing some banks who were unwilling participants to start to push some loans out there.
Surprising That Banks Not Taking Advantage Of Opportunity
It’s kind of surprising to me because the reality is that the Fed has said that they’ll buy back all the loans. Plus on top of that, they’ll pay that five percent origination fee slash commission for smaller loans. So banks have an incentive and it’s a unique opportunity for banks to pick up new clients. Never in the history of banking has a bank been able to say to a small business, I’ll loan you money and if you increase or maintain your employment you don’t have to pay it back.
I really truly expected that forward-thinking banks would use this as a way to attract new customers because it’s a unique opportunity. But they just haven’t. It’s going to take some prodding, unfortunately, to really get the stimulus in the hands of those who need it. Also, unfortunately, even more so, it’s a race against time because a lot of these companies are looking at going out of business if they don’t get that money in their hands.