Written by The Business Journal Staff
Wells Fargo & Co. announced Wednesday it will participate in the Paycheck Protection Program, thanks to action from the Federal Reserve.
The Central bank announced it would “temporarily and narrowly” modify an asset cap on San Francisco-based Wells Fargo so it may lend under the $250 billion Paycheck Protection Program (PPP) and the Federal Reserve’s upcoming Main Street Lending Program.
Applications opened on Friday for the PPP, which is a low-interest loan available to small business owners that is forgivable if companies can maintain pre-COVID 19 payroll levels.
Wells Fargo said in the first two days alone, it received more than 170,000 “indications of interest” from customers for the program. The bank closed the window on this lending program after exhausting its $10 billion in lending capacity for the SBA-administered relief programs, reported the Silicon Valley Business Journal.
Wells Fargo is the top financial institution in the Central Valley, with nearly 21% of the market share as of 2018, according to the most recent Business Journal Book of Lists.
Customers were unhappy about the bank’s move to stop processing applications for the program. Wells Fargo officials are confident this move from the Fed will ease its relief lending.
“Wells Fargo appreciates the targeted action of the Federal Reserve to support the needs of small businesses through PPP and looks forward to expanding relief to many more small businesses and nonprofits… While the asset cap does not specifically restrict Wells Fargo’s participation in this program, this action by the Federal Reserve will enable Wells Fargo to provide additional relief for our customers and communities,” said Wells Fargo CEO Charlie Scharf in a statement.
The cap was implemented in the wake of an account fraud scandal that forced Wells Fargo to agree to pay a $3 billion legal settlement.
“The changes do not otherwise modify the Board’s February 2018 enforcement action against Wells Fargo,” according to a Fed news release. “The Board continues to hold the company accountable for successfully addressing the widespread breakdowns that resulted in harm to consumers identified as part of that action and for completing the requirements of the agreement.”