UBS has launched a lending initiative that will help clients of UBS financial advisors obtain loans under the federal government’s new Paycheck Protection Program.
The program is designed to help small businesses under stress from the economic fallout of the COVID-19 pandemic maintain operations and retain workers, but its initial rollout has been riddled with difficulties. Banks were reportedly unprepared to administer the program because they lacked guidance from the government, and the Small Business Administration, which guarantees the loans, was overwhelmed by demand.
The Federal Reserve then jumped in, announcing it would backstop the program by supplying liquidity to participating financial institutions through term financing backed by the loans.
Now it appears that the program could run out of funds sooner than expected. The American Bankers Association reported Sunday that $205 billion of the $350 billion appropriated for PPP loans has already been claimed. Congress is considering a $250 billion expansion of the program but hasn’t yet agreed to one yet as Democrats argue for more funding for state and local governments and hospitals.
Under the UBS initiative, the firm’s financial advisors and their client service associates and banking specialists in the U.S wealth management business can refer clients in need of a PPP loan to Newtek Business Services Corp.’s online platform. In addition, UBS Bank USA can provide loans to small businesses.
As of Monday, Newtek’s Small Business Finance unit, a licensed lender under the SBA’s Section 7(a) lending program, had approved a total of $552 million in PPP loans, which are now awaiting processing by the SBA.
In addition, UBS Bank USA expects to make as much as $2 billion available to support businesses looking for PPP loans and other benefits contained in the $2.2 trillion Coronavirus Aid, Relief and Economic Security CARES) Act, which created the PPP loans and other benefits.
“This new initiative will allow us to help a number of our clients and other small-business owners obtain the loans they need to keep their operations running during the COVID-19 pandemic,” said Tom Naratil, co-president of Wealth Management Americas and president, UBS Americas.
“We have already seen significant client interest in the PPP and are pleased that we have the ability to extend this opportunity to our financial advisors and client service associates to support our clients,” said Michael Blum, UBS head of Banking Americas and USB Bank USA chairman.
Any fees generated by the UBS initiative will be donated as emergency grants and funding to small-business owners in underserved populations, according to the firm.
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