Troubling News about CARES Act Program

On Wednesday, April 1, Gossips published a press release from Columbia Economic Development Corporation (CEDC) about the Paycheck Protection Program, a $349 billion program created by the CARES Act to help small businesses sustain their businesses and keep their workers employed. The program would be managed by the Small Business Administration (SBA). Also on Wednesday, an officer of a local bank indicated on the Hudson Business Coalition list serve that his bank was partnering with Pursuit Lending, one of the largest small business lenders in the state, to run the program. 

On Thursday, April 2, the Albany Business Review reported that Pursuit, which had previously indicated it was allocating $400 million to fund the Paycheck Protection Program and was prepared to allocate more, decided it would not be able to offer Paycheck Protection Program loans "due to the uncertainty around the program and lack of capital": "One of New York's largest SBA lenders says it won't offer loans as part of $350B Paycheck Protection Program." According to the article, the decision came after the U.S. Department of the Treasury said the interest rates for the loans would be set at 0.5 percent, and banks started pulling out of their commitments to contribute to Pursuit's loan fund. Patrick MacKrell, CEO of Pursuit, is quoted in the Albany Business Review as saying, "As a result of the limit on the interest and term, major sources of funding that had been available to us to capitalize a fund are no longer available. I am told by many banks that they are reconsidering participation in the program." MacKrell is further quoted as saying, "We are a couple days away from the supposed start of this unique program and all that we have available in terms of guidance is press releases, FAQs and an application form. We certainly cannot run a government loan program on press releases and FAQs."

Shortly after midnight, Key Bank released a statement indicating that, late Thursday night, the Small Business Administration (SBA) released updated guidance and an updated application. The application process is expected to begin today, Friday, April 3.
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