RALEIGH – Peter Gwaltney, President and Chief Executive Officer of the North Carolina Bankers Association, says new guidance from the US Treasury Department “addresses many of the concerns” banks have about the coronavirus crisis loan package being made available today. The state’s financial institutions expect “extraordinary demand,” but he acknowledges some banks are not ready to offer the program.

Gwaltney told American Banker on that he had concerns about the Small Business Administration’s $349 billion Paycheck Protection Plan, but in an exclusive interview with WRAL TechWire he says changes made late Thursday have been made that are helpful.

Our exclusive: Q&A:

  • I understand that requirements for banks were changed late Thursday – is the new guidance from the Treasury Department more helpful to banks? In what ways?  

Yes, the guidance received [Thursday] night addressed many of the concerns bankers had about the program.  The changes in the guidance received by bankers last night did not affect borrowers, but it gave bankers the clarity they needed to move forward with such a large and complex program.

NC Bankers Association photo

Peter Gwaltney

For example, the guidance specified the Government’s expectations on underwriting for the PPP loans and gave lenders a “hold harmless” that allows banks to rely on the borrower’s documentation and attestation for loan approval and forgiveness.

It also clarified the required documentation, process and timeline for loan forgiveness.  Until these clarifications and changes, bankers did not know what they were signing up to do and how much risk they were taking to participate in the program.

  • Are your members ready to deal with the expected onslaught of loan applications?

While some banks are ready to begin taking applications today, many banks, large and small, are still getting prepared to offer the program.

The guidance wasn’t received by the financial industry until last night, so bankers across the country stayed up most of the night and got up early this morning to work on this.

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Banks that are SBA preferred lenders (1,700 nationwide out of 5,100 total banks) are the first lenders to be allowed to offer the program, and all others will have the opportunity to offer the program next week, according to the guidance received last night.

  • What are you telling your members about how to capitalize on the project and deal with it and demand?

We expect the demand to be extraordinary and banks will do all they can to meet the needs of the businesses in their communities.  That’s who bankers are, that’s what banks do.

The PPP is being offered by banks as a service to businesses in their communities as part of the Government’s efforts to reduce the financial uncertainty related to the coronavirus.

GM and other companies are being asked to make ventilators – the banking industry is being asked to disburse $350 billion to small businesses through forgivable loans.

We’re all in this together, and we’re proud to be able to do our part.

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