RESEARCH TRIANGLE PARK – It’s as if small business owners, including some startups in the Triangle, are lined up for the start of the Indy 500 as the flag drops Friday for $350 billion in loans through the federal government’s $2 trillion coronavirus economic relief package.

The loans are seen as a lifeline for companies that are short of capital and losing business as the virus shuts down much of the US economy. Small business makes up some 44 percent of the US gross domestic product and employ millions of people.

But banks are warning they may not be ready for a fast start in dealing with what’s expected to be a flood of applications.

NC Banker CEO: Many banks not ready for virus crisis loans, demand will be ‘extraordinary’

In a statement to Bloomberg News, Charlotte-based Bank of America said it is anticipating big demand for loans.

“We know for these businesses speed is of the essence,” the bank said. “We can move fastest with our nearly 1 million small-business borrowing clients. That is our near-term priority. As the administration has made clear, going to your current lending bank is the fastest route.”

Wells Fargo, meanwhile, said applications can be made only online. But just before 7 am. the bank’s website had not yet published a link through which applications could be submitted.

The news about challenges at banks concerns Triangle serial entrepreneur Scot Wingo – both for the company he runs (Get Spiffy, an ondemand car maintenance firm in Morrisville as well as other companies that are part of his investment portfolio.

“Yes, we’re going to apply,” Wingo told WRAL TechWire on Thursday night as the countdown to the waiving of the starting flag continued.

“Every business I know am/involved with plans on taking a shot at it and I agree it’s going to be a bit of chaos.”

Not everyone is a fan of the program, however.

Triangle entrepreneur Brian Hamilton, who also is an investor, is worried not such much about the loan program as he is about the role of banks in the process which has been expanded well beyond the Small Business Administration.

“There is a glitch in the plan- it delegates authority to make and approve the small business loans to 7(a) lenders, banks like Wells Fargo who make SBA loans,” Hamilton, who cofounded and later sold software firm Sageworks, wrote in a post published at The

Triangle entrepreneur sees ‘glitch’ in emergency loan programs for small businesses

“It is good that money is being provided for loans, but the vehicle for those loans is poor, as banks are not very agile and are slow to make loans in uncertain times. Anyone who has ever applied for a loan, even in a good economic climate, can attest to this fact. Today, we need a Ferrari, not a horse and buggy.”

NC Banks worried

The head of the North Carolina Bankers Association are worried, too – not so much about demand but conditions.

Peter Gwaltney issued a warning about the program’s requirements. He called conditions of the program “unworkable,” according to American Banker. 

“It’s asking a lot of banks to take on unmanageable and immeasurable risk,” Gwaltney said. “The delivery channel is shrinking by the day. We don’t know what to expect tomorrow.”

Q&A: Where, how can startups, small businesses find funding in virus crisis?

Several other media outlets reported Thursday evening that banks were saying they weren’t ready. The federal program is enabling banks and financial institutions to participate in the so-called Paycheck Protection Plan, but information needed about loan guidelines didn’t arrive until Thursday afteroon, NBC News reported.

“Banks warn of ‘utter chaos’ in new small business lending program,” NBC warned.

“[I]t wasn’t until Thursday night that banks received their 31 pages of guidance from Treasury on how to lend the money — and some haven’t even decided whether they can participate on the opening day,” NBC added.

Finance giant Chase Bank warned it may not be ready to process applications.

“Financial institutions like ours are still awaiting guidance from the SBA [Small Business Administration] and the U.S. Treasury,” Chase Bank said in an email to business customers, according to NBC. “As a result, Chase will most likely not be able to start accepting applications on Friday, April 3rd, as we had hoped.”

The New York Times reported that demand is expected to be very strong.

“The response is overwhelming — it’s unlike anything I’ve ever seen in my career,” Craig Street, chief lending officer of United Midwest Savings Bank, a community bank in Columbus, Ohio, said, according to the Times. “We’re talking about attempting to do 10 times our normal monthly loan volume, and maybe more than that.”

NBC also noted that Treasury Secretary Steven Mnuchin said the program is ready.

“We just put up the federal register with the new guidelines for lenders,” he said at a White House briefing. “I’ve been assured that the banks will start lending tomorrow.”