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Community Banks to Seek More U.S. Help in Small Business Program

April 9, 2020, 3:13 PM

A trade group for community banks plans to ask the Treasury Department and the Small Business Administration for better access to the government’s new $349 billion program to keep small businesses afloat in the coronavirus outbreak, as concerns persist that many of its members are shut out.

The group, Independent Community Bankers of America, also plans to ask the Federal Reserve to immediately create a program to backstop the small business loans, as well as provide advances against loans from small banks, according to a draft letter viewed by Bloomberg.

Community banks have experienced delays in accessing the SBA’s website for the program, created by the coronavirus stimulus President Donald Trump signed last month, and many are locked out of the system because they haven’t obtained authorization numbers, the group said in the draft letter to Treasury Secretary Steven Mnuchin and SBA Administrator Jovita Carranza.

The letter requests a user manual for the PPP platform, as well as more reliable technology to avoid future setbacks. About a third of community banks have been unable to access the system since it opened on Friday, the group says.

The group will also urge the SBA and the Treasury to allocate at least 25% of existing and future business lending funds to small banks, since they hold about 27% of industry assets. Community banks employ 750,000 people across more than 50,000 locations nationwide, according to the letter.

“Community banks make roughly half of all small business loans and serve markets not served by the large banks,” the ICBA said in the letter. “To ensure program access to all communities and regions of the nation, we must not allow program funds to be used nearly exclusively by the largest banks.”

To contact the reporters on this story:
Olivia Rockeman in New York at orockeman1@bloomberg.net;
Jennifer Jacobs in Washington at jjacobs68@bloomberg.net

To contact the editors responsible for this story:
Michael J. Moore at mmoore55@bloomberg.net

Alex Wayne, Sara Forden

© 2020 Bloomberg L.P. All rights reserved. Used with permission.