Citibank last of big banks to offer Paycheck Protection Program loans
Citigroup CEO Michael Corbat pledged during an April 1 appearance on CNBC that his bank was working non-stop to help clients through the growing economic crisis brought on by the coronavirus outbreak: “We are making sure that our customers and clients can take advantage of the government assistance programs,” Corbat said.
Nearly two weeks later, that announcement is starting to look like an April Fools’ Day prank. “A few days ago the president said Citi was doing a great job,” complained Carlos Martin, solo owner of a law firm that has been a Citibank small business client for over a decade. “They are not doing a great job. Either they are dragging their feet because they don’t see a profit [in small business help] or they are incompetent.”
It wasn’t until Thursday that Citi announced it would begin offering applications for the federal Paycheck Protection Program — the $350 billion government loan program to help small businesses — making it the last of the nation’s four largest banks to do so. The stimulus program offers low-interest loans that are forgiven, including the interest, as long as a company retains and pays its workers for the following eight weeks. The loans are available until June 30, and Citi says it will lend until then.
Bank of America was the only one of the nation’s biggest banks to allow customers to file applications when the program opened nearly a week ago. JPMorgan Chase began taking preliminary applications a few hours later.
Citi’s website, on the other hand, for much of the week said only that applications would be coming soon, giving no indication when clients would be able to apply. Applications are still not available on its website. Instead, there is a “Notify Me” button to request an application.
The bank said Friday it will reach out to clients that qualify for the program directly and offer an application. But the SBA loans are on a first-come, first-serve basis. At least for now, most customers have to go to their primary bank to apply for the loan. That appears to have put Citi clients at a disadvantage. On Thursday, the Small Business Administration announced that loans for more than a third of the money in the program, $140 billion, had already been approved.
On Friday evening, Citi said it had received applications for just $2 billion in loans, far less than Bank of America and others had reported. That could be because Citi’s small banking unit is smaller than many of its rivals’ competing operations.
But Citi also said Friday that a number of its approved loans had already been made, with clients receiving the funds in their accounts on Friday afternoon. That appeared to be faster than at other banks, which have taken applications for days but appear to have made relatively few loans.
“We are working with our clients as quickly as possible to complete and submit their applications and have already started to distribute funds to our clients,” a Citi spokesperson said in a statement. “The timing of the digital portal launch was driven by our focus on testing our process and origination capabilities.”
Most all of the major banks have been subject to criticism on social media sites like Twitter this week. Citi’s seemed to be focused on the fact that the bank’s PPP information page, which said applications were not ready yet, was titled, “Supporting small business when it matters most.”
By Friday, a number of messages appeared on Twitter from users who said they had been able to apply for a PPP loan and received word from Citi they had been accepted.
Sean O’Roake, who runs an insurance brokerage in New York, said he had been approved for a PPP loan from Citi, and that the process took less than a day.
“Not sure the frustrations others are having,” O’Roake wrote on Twitter. “But our process from application to approval for the PPP via Citi took less than 24 hours. I’m amazed.”
A Citi spokesperson said the bank expects to have reached out to all of its clients with information on how to apply for a PPP loan through the bank by the end of Friday.
For lawyer Martin, though, Citi’s efforts to start its application process took too long to help him. Martin said he hit the notify button twice in the past week, including once on Friday. He’s also called his Citi private banker and the small business lender who opened his account. Yet Martin says he never received any calls or notifications from Citi.
On Friday afternoon, the sole practitioner who specializes in representing condominium boards gave up on Citi. Martin applied for a PPP loan through Kabbage, an online lender that he had never used. Kabbage is one of the few lenders accepting applications from small businesses that weren’t previously clients.
Martin still doesn’t have a loan, but he is feeling better about his chances. He quickly got an email back from Kabbage that said his application had been received and was being processed.
“If others can have their system up in a day or two, I don’t know why Citi can’t or won’t do it,” Martin said. “I decided I had to go somewhere else, and I have.”