Wells Fargo Caps Its Participation In Fed Small Business Lending

Wells Fargo & Co. WFC restricted its contribution to $10 billion in the Federal government small business rescue program due to regulatory constraints.

What Happened

Wells Fargo launched its application portal on Saturday and commented that it has possibly reached its $10 billion capacity based on the applications it has already received and thereby capping its role in the rescue program, Reuters reported.

The government commenced its $350 billion program on Friday, which would provide low-interest loans to support small businesses for payroll and other fixed costs in the upcoming eight weeks.

As American businesses began applying for loans on Friday, Bank of America Corp. BAC said it received 85,000 applications applying for $22 billion, the London Free Press reported.

What's Next

Wells Fargo said that it would give the preference for loans to nonprofits and businesses with less than 50 employees.

In March, almost $1.8 billion in payments were deferred, and more than $28 million wavered in fees for customers impacted by the COVID-19 outbreak.

"While we are actively working to create balance sheet capacity to lend, we are limited in our ongoing ability to use our strong capital and liquidity position to extend additional credit," Chief Executive Charlie Scharf said in a statement.

Amid the COVID-19 pandemic, small businesses that hire almost half of U.S. private-sector employees are dented drastically as consumers halt spending, and non-essential businesses remain shut down.