Wells Fargo has told customers still waiting in line to get an emergency small-business loan that, because of the backlog it's facing, they should consider applying at another bank.
The company issued the warning in an email to customers Friday, just two days after the Federal Reserve lifted the $1.95 trillion asset cap it had imposed on Wells Fargo in 2018. The Fed made the move so the bank could make more Paycheck Protection Program loans to small businesses that took an economic hit tied to the coronavirus epidemic.
Wells, blaming the asset cap, early last week stopped taking applications under the $349 billion program overseen by the Small Business Administration and Treasury Department. After the Fed lifted the cap on April 8, Wells reopened its online portal and again began accepting “expressions of interest” in the SBA loan program.
The email to customers was reported by the San Francisco Business Times on Friday. Separately, a Wells Fargo customer provided a copy of the email to American Banker.
Though Wells has said it is processing applications in the order in which they are received, the bank told customers in the email that they “may be able to apply elsewhere” for a PPP loan.
“While you remain in queue based upon when you submitted your initial interest, due to high demand we are not able to begin your application at this time,” the email said.
“You remain in our queue. However, since there is a limited amount of funds approved by the SBA for the Paycheck Protection Program, we want you to be aware of your options,” the email continued. “You may want to apply elsewhere to increase your chances of receiving a loan before the funds run out.”
The bureau said it began developing the standards before the coronavirus pandemic. But more transfers may occur as some servicers struggle to meet their obligations during the economic downturn.
The central bank said customers will be able to make more transfers and withdrawals "at a time when financial events associated with the coronavirus pandemic have made such access more urgent."
More details have emerged about the damage the coronavirus pandemic is inflicting on the hospitality industry. One servicer alone has received 2,000 workout requests in the past month.
Wells is not alone in being inundated with SBA applications. The SBA program has been marred by chaos since it opened on April 3.
The American Bankers Association said in a report April 12 that $205 billion of the $350 billion appropriated for the PPP already has been claimed. The figure inlcudes applications that banks have processed and that the SBA has approved, though customers may not have received the funds yet.
Last week, Treasury Secretary Steven Mnuchin asked for an additional $250 billion to replenish the emergency loan program due to the huge demand.
A Wells spokeswoman said Monday that customers who filled out an expression of interest are in the queue, waiting their turn. Wells has said it received 170,000 applications in the first two days of the program.
“We are committed to helping as many small businesses as possible given the realities of both this unprecedented situation and the tremendous interest in the PPP,” the spokeswoman said.
To be eligible, customers must have had a Wells Fargo business checking account as of Feb. 15, 2020, be enrolled in business online banking, and meet SBA program requirements.
For more than two years, Wells was barred from growing its assets above $1.95 trillion. The Fed imposed the asset cap on Wells following a string of scandals including revelations that employees had opened millions of customer accounts without authorization.
All profits that Wells Fargo makes from additional support to the SBA program and the Main Street Lending Program for midsize business will go to either the Treasury or a nonprofit that helps small businesses, the Fed said.
