JPMorgan Chase is telling some customers that they apply Salary protection program (PPP) which could be more successful by applying elsewhere, CNBC relationships. Chase’s warning came in anticipation of the $ 484 billion coronavirus aid package that President Trump signed in law Friday, 310 billion dollars of which it will reconstitute the PPP.
The bank classified applicants based on where they fall into the processing queue and sent an email to those still in the early stages of the process that “your application is in phase 1, with an extremely high volume of questions ahead of yours. We wanted to provide you with this information, so that you can decide if you would like to try applying with another lender. ” Chase has received applications totaling $ 40 billion since the program began in early April.
The initial $ 350 billion allocated to the PPP was P. out of stock within two weeks, and many are concerned this will happen again, given the huge backlog of applications, which makes it important for banks to set clear expectations among applicants.
Banks have a daily volume of 50 billion dollars in applications – a level of demand that the PPP would almost need $ 1 trillion to satisfy. Some experts have said the funding could only last a few days given the volume of existing applications that banks already have to process. “Most if not all of the funding that Congress is considering right now is already exhausted,” for Nick Simpson, spokesperson for the Consumer Bankers Association.
The new loan allocates around one-third of the funds to smaller lenders such as community banks and
, but they are also supported by applications: smaller banks have She said they are making loans for a full year on a weekend. Meanwhile, it’s unclear at this point whether Congress will provide a third round of funding – and without that, thousands of small businesses are likely to still be left without access to relief loans.
While Chase’s approach isn’t a solution to these concerns, we believe its transparency is a good move, as it will help mitigate customer expectations. The actual funding channeled through the PPP is not under the control of the banks, but they are still bearing the brunt of criticism of its shortcomings: the banks are the ones processing and lending, and are about to raise billions from Small Business Association fees. will pay to facilitate them. In addition to the huge volume of applicants, the PPP was initially touted as same-day loans, which it did not confirm.
We have seen customer frustration with this manifesto in lawsuits that accused some of the major US banks of priority larger loan applicants for higher commissions o under processing your customers first. Chase’s decision to set more realistic expectations can therefore help reduce some of the feeling of abuse among clients. By anticipating this frustration and working to proactively mitigate it, Chase might arouse less anger than if he over-promised a quick loan facility or didn’t openly communicate these issues.
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