Bank executives who were concerned about the $349 billion emergency small business program created in the $2.2 trillion coronavirus stimulus bill passed last week reached out to President Trump’s daughter and senior adviser Ivanka Trump as they tried to negotiate higher interest rates, according to Bloomberg.
The calls came from multiple major bank executives, including from Bank of America Corp., who questioned the Paycheck Protection Program, which provides generous loans to small businesses with the caveat that they use at least 75 percent to pay their employees.
As a result of those negotiations, Treasury Secretary Steven Mnuchin and other administration officials requested to increase the interest rates on the forgivable, government-backed loans, and worked to encourage smaller banks to participate, as well.
Mnuchin announced Thursday that the Treasury Department would cut interest rates in half in an effort to convince those smaller banks to participate and alleviate the load from major lenders.
“I’ve told these bankers they should take all their traders and put them in the branches. There’ll never be another opportunity to earn five points on a 90-day fully government-guaranteed loan,” Mnuchin said on Thursday. “To make this attractive for community banks, we’ve agreed to raise the interest rate.”
The new program was off to a rough start this week as banks and other lenders said the $349 billion program lacks clear guidelines to handle a looming wave of loan applications that could overwhelm the system while leaving some firms in the lurch.