Senatorial Minority Leader Chuck Schumer, a Democrat from New York, speaks during a press conference on Capitol Hill in Washington, DC on Tuesday, April 21, 2020.
Sarah Silbiger | Bloomberg | Getty Images
Three leading Democratic senators are urging the Small Business Administration to investigate whether banks gave preferential treatment to the wealthy as they handed out money from a key aid program.
In a letter dated Thursday, the leader of the Democratic minority in the Senate Chuck schumer and Sens. Ben Cardin of Maryland and Sherrod Brown of Ohio asked the agency’s inspector general to review reports that lenders have “prioritized claims from their bigger, richer clients over small businesses” damaged by the coronavirus pandemic.
Lawmakers also asked the SBA to “provide recommendations” by May 8 on steps it is taking to “ensure small businesses get the money they need and are treated fairly” by lenders. participating in the program.
Senators announced their letter the day the President Donald trump signed a bill to replenish the Paycheck Protection Program, which provides forgivable loans to small businesses if they use the money for expenses such as payroll and rent. The $ 350 billion seed funding pool created last month quickly evaporated, and the new law injects an additional $ 310 billion into the program, including $ 60 billion specifically for small lenders.
Some lawmakers pressured the SBA to change the program after a chaotic rollout, which included some large companies receiving help while thousands of small candidates were left in limbo. The agency on Thursday issued guidelines to make it harder for state-owned enterprises to access aid.
The letter, announced Friday, adds to the pressure on the Trump administration from lawmakers as it oversees an unprecedented flood of emergency spending that now exceeds $ 2.5 trillion. Schumer is the principal Senate Democrat, while Cardin and Brown are the principal members of the small business and banking committees, respectively.
An SBA spokesperson did not immediately respond to CNBC’s request whether the agency would investigate the reports or further change its rules for the program.
Senators emphasized a New York Times report saying that some of the biggest American banks such as JPMorgan Chase and Citibank processed loans from private and commercial bank clients before moving on to small business applications. The newspaper reported that clients of Citi’s private banks simply had to submit documents to their bankers, who filed claims for them.
“Almost all” of Chase’s 8,500 private and business applicants got a loan, compared to just 18,000 of the more than 300,000 small business clients who tried to get help, according to the Times. In a statement to CNBC this week, Chase said it “worked as quickly as possible in a race against time, volume and manual processes.” The company said the vast majority of its loans went to “small business customers.”
Meanwhile, a spokesperson for Citi told CNBC that five of the company’s 6,573 loans went to clients of the private bank. Another 470 loans were granted to clients of the commercial bank.
A spokesperson for Citi said “we strongly disagree” with the Times report and added that “there was no preferential treatment”.