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During these trying times we are seeing firsthand how people are stepping up. From the around-the-clock care our medical professionals are providing, to the generosity people are showing by simply donating to a GoFundMe site to help a local small business. The business community is no exception.
Access to capital—cash on hand to keep a business running—is essential to businesses, and in our current climate this could be the difference between a business reopening and rebuilding, or permanently closing its doors. A new poll from MetLife and the U.S. Chamber of Commerce reveals that one in four small businesses (24%) say they are two months or less from closing permanently amid the economic downturn caused by the coronavirus pandemic.
Main Street businesses are the economic engine of our economy and like any engine they need fuel. The financial industry quickly realized funding would be a challenge and stepped in to provide funding and relief to small businesses impacted by the coronavirus.
Support for small businesses through SBA loans
The financial industry is playing a key role providing emergency funding to small businesses through the Small Business Administration’s (SBA’s) Paycheck Protection Program. This program, created through the CARES Act which the Chamber pushed for, provides loans of up to $10 million to small businesses impacted by the coronavirus.
These loans, administered at the local level by banks and credit unions, are designed to allow small businesses to meet payroll and day-to-day operating expenses. The Paycheck Protection Program’s maximum loan amount is $10 million with a fixed 1% interest rate and a maturity of two years.
Here are some early PPP successes:
- On the PPP’s first day in operation, the Small Business Administration—along with over 1,200 local lending partners—processed more than 28,000 loans worth $5.4 billion.
- As of April 6, Bank of America received applications from 177,000 small businesses for a total of $32.6 billion in financing. These numbers are applications and do not represent sums approved by the SBA.
- Wells Fargo has focused its PPP efforts on lending to nonprofits and small businesses with fewer than 50 employees. The bank reached its capacity of $10 billion of lending under PPP due to an asset cap earlier imposed by regulators on the bank.
The Chamber has put together a guide to help small businesses determine their eligibility and apply for a loan through the PPP.
Support for our customers
Financial institutions have also been providing funds, low-interest loans, and deferred payments for their small business and individual customers, including:
- JP Morgan committing $50 million to fund community groups providing food, support and medical supplies. $5 million of this will go to community-development financial institutions to provide low or zero-interest loans to vulnerable small businesses.
- Ally Financial launching a comprehensive set of initiatives to help people and communities impacted by the coronavirus. For example, by allowing some customers to defer payments on auto loans and mortgages.
- Bank of America, CITI, American Express and many others doing the same by allowing some customers to defer payments on credit cards.
- Citizens Bank announcing a commitment of $5 million to support communities and businesses impacted by the coronavirus. The Community Support Relief program funds coronavirus-related efforts in regions where the bank operates—Massachusetts, Pennsylvania, and Rhode Island. While a Small Business Relief and Recovery program provides funding and other assistance to small businesses in those states.
- Kabbage, a financial technology company, launching www.helpsmallbusiness.com to enable anyone to purchase an online gift certificate from participating small businesses to support them financially.
- Wells Fargo deferring more than 700,000 payments representing almost $1.8 billion and providing over 750,000 fee waivers exceeding $28 million.
Support for our communities
The financial services sector is not just a source of capital, but is also directly supporting communities across the country impacted by the coronavirus. Here are just a few examples:
- Bank of America announced a $100 million commitment to support local communities in need as the world faces unprecedented challenges from the coronavirus. The funds will help increase medical response capacity, address food insecurity, increase access to learning as a result of school closures, and provide support to the world’s vulnerable populations.
- The Citi Foundation has committed $15 million to support COVID-19 immediate relief activities globally. $5 million will be deployed to international, country-specific efforts in places that are severely impacted. The remaining $10 million will be split between No Kid Hungry to support emergency food distribution programs across the U.S. and the COVID-19 Solidarity Response Fund.
- Nasdaq donated $6 million total, including $5 million to: the Opportunity Fund’s Small Business Relief Fund, World Central Kitchen’s relief efforts and the World Health Organization’s COVID-19 Solidarity Response Fund. Nasdaq also donated 12,000 face masks to the Greater New York Hospital Association.
- Liberty Mutual Insurance allocated over $6 million to COVID-19 relief efforts. This includes up to $4 million in emergency grants for current partners, $1 million for the Boston Resiliency Fund, $50,000 for the Seattle Foundation COVID-19 Response Fund, and $1,000 for each of their “880 Serve with Liberty” (employee service) partners.
- The Wells Fargo Foundation will distribute $175 million in donations to help address food, shelter, small business and housing stability, and to help public health organizations.
No matter the challenge, the financial industry has always found a way to come together to tackle a crisis. This time is no different. Working together to provide capital for businesses and resources for the communities we operate in, we will make it through this challenging time and emerge stronger from it.
For more resources on how businesses, workers and families can navigate the challenges posed by the coronavirus outbreak, visit the U.S. Chamber’s coronavirus page: www.uschamber.com/coronavirus