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.