Wells Fargo To Cap SMB Bailout Loans at $10 Billion

Wells Fargo announced it will begin taking loan applications on Monday (April 6) as part of the Paycheck Protection Program (PPP) and will disperse $10 billion to nonprofits and businesses with fewer than 50 employees.

The country’s fourth-largest bank said it has received a lot of interest in PPP loans since the program’s opening day on Friday (April 3). It anticipates that its loan capacity will be maxed out under the program since it is operating with the current asset cap limitations.

“Today, the company continues to operate in compliance with an asset cap imposed by its regulator due to actions of past leadership. While we are actively working to create balance sheet capacity to lend, we are limited in our ongoing ability to use our strong capital and liquidity position to extend additional credit. Since I arrived at the company, I have been clear that we will direct all resources necessary to do the work required by our regulators and we are in the process of doing so,”  said Charlie Scharf, chief executive officer of Wells Fargo.

In order to give money to the most neediest businesses, the lender said it would focus on extending loans to nonprofits and small businesses with fewer than 50 employees.

“We are committed to helping our customers during these unprecedented and challenging times but are restricted in our ability to serve as many customers as we would like under the PPP. While all businesses have been impacted by this crisis, small businesses with fewer than 50 employees and nonprofits often have fewer resources. Therefore, we are focusing our efforts under the Paycheck Protection Program on these groups,” said Scharf.

The U.S. Small Business Administration (SBA) is offering $349 billion in forgivable small business loans to keep companies afloat during the coronavirus pandemic. The loans can be used to cover costs like payroll, utilities, mortgage interest and rent.

The PPP loans are part of the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act signed into law on March 28.

Wells Fargo said it will review everything customers submitted online through April 5 regarding the program. Customers will be notified with updates in the coming days.

The company also said that program fees will be donated as charitable grants to nonprofits that support small businesses, which is a focus of Wells Fargo’s philanthropic efforts.

Wells Fargo has also put foreclosures, evictions and repossessions on hold.

On Friday (April 3), banks and other lenders officially opened the gates for applications to the PPP to relieve some of the burden brought on by the coronavirus pandemic. Most banks, however, couldn’t process any applications.