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Smaller lenders on Wednesday evening were getting special access to a key loan program for small businesses hurt by the coronavirus crisis, in a development that big banks quickly criticized.
The move by the Treasury Department and Small Business Administration comes as big banks KBE, +5.90% face lawsuits that claim they put larger borrowers first — and as advocates say minority and women owners of businesses are getting shut out of the Paycheck Protection Program.
“In order to ensure special access to the PPP loan program for the smallest lenders and their small-business customers, the SBA is only accepting loans from lending institutions with asset sizes less than $1 billion from 4:00 p.m. EDT until 11:59 p.m. EDT on April 29,” Treasury Secretary Steven Mnuchin and Small Business Administrator Jovita Carranza said in a joint statement.
“SBA is working to ensure that all eligible small businesses have access to this funding to sustain their businesses and keep their employees on payroll,” the statement also said. “All lending institutions, regardless of size, will still be able to submit PPP loans outside of this timeframe. This reserved processing time currently only applies to April 29.”
The head of a lobbying group for the largest U.S. banks blasted the decision.
“With the SBA blocking nearly 800 banks, relief for potentially thousands of small business owners and their employees will be delayed. A better solution would be a fully operational system that allows banks of all sizes to provide support to Main Street,” Financial Services Forum President and CEO Kevin Fromer said in a statement.
The PPP has drawn a range of criticism, with small businesses and their bankers reporting widespread problems in getting the loans during the past month, including delays this week as the program reopened.
See: Emergency loans for small businesses ‘flowed to areas less hard hit’ by coronavirus, study finds
Meanwhile, more than 200 public companies have disclosed getting PPP aid, though many of them are giving the money back after an outcry and a May 7 deadline from the Treasury Department for returns.
Read more:These public companies are returning emergency loans meant for small businesses
The PPP quickly ran through the $350 billion that it received initially through last month’s $2.2 trillion Cares Act, and then last week got an additional $320 billion as President Donald Trump signed into law the $484 billion Paycheck Protection Program and Health Care Enhancement Act.
