The launch of a $349 billion loan program that is key to the government’s hopes of helping the nation’s small businesses survive the economic downturn got off to a rocky start Friday as the big banks in charge of doling out the money said they weren’t prepared or were limiting applicants to their closest customers.

Wells Fargo, Citigroup and PNC said they were still reviewing the program’s rules, which were released by the Treasury Department and Small Business Administration just hours before the program’s launch. JPMorgan Chase, the country’s largest bank, didn’t begin accepting applications until 1 p.m., after initially saying it wouldn’t be ready at all Friday.

Bank of America was one of the few big banks that began taking applications Friday morning, earning the praise of President Trump. “Great job being done by @BankofAmerica and many community banks throughout the country. Small businesses appreciate your work!,” Trump said on Twitter.

But the Charlotte-based bank faced backlash from some customers for initially limiting its application pool to businesses with which it already had a lending relationship. “I have worked hard not to have a lot of debt, I feel like I am getting penalized,” said Don Allensworth, whose company, the NewGround Group, has fewer than five employees. “We’re on the border right now; there is no way to know what the next 90 days will hold, for my clients and for my income.”

The emergency lending fund, known as the Paycheck Protection Program, is a cornerstone of the $2.2 trillion economic rescue package Congress passed last week. The Trump administration rushed the program’s development, promising small businesses would receive loans the same day they made their applications, an unprecedentedly quick turnaround for a government-backed lending program. But the guidelines for the program were not finalized until late Thursday night.

The new loans “will bring immediate economic relief and financial certainty to millions of small businesses & their employees,” SBA administrator Jovita Carranza said on Twitter Friday afternoon.

Carranza and Treasury Secretary Steven Mnuchin reported nearly 13,000 applications had been processed, adding up to more than $2 billion in loans, by Friday afternoon. The SBA did not answers questions about how much money had been disbursed.

“The system is up and running,” Mnuchin said in a tweet, crediting community banks with pushing hundreds of loans. “Great work!!”

Paycheck Protection Program loans are designed to be particularly favorable to borrowers, with ultralow interest rates, no payments for the first six months and the opportunity to have the loan completely forgiven if employees can be kept on the payroll throughout the crisis. And the loans will apply to a broad swath of the U.S. business community, including sole proprietors and independent contractors.

Reports that the program was getting off to a rocky start frustrated some lawmakers.

Sen. Marco Rubio (R-Fla.) said in a video posted on Twitter that some big banks were putting “crazy restrictions” on who could apply for a loan.

“Please don’t be a bunch of jerks. When you needed the country to help you they did,” he said, referring the 2008 global financial crisis when banks took billions in taxpayer bailouts. “Now the country needs you to help them and we’re paying you to do it, and it’s the government’s money, it’s the taxpayers’ money.”

Banking industry officials have warned that the abbreviated review process the Trump administration set ― which allows borrowers to attest to their own eligibility without government verification ― will make the program a magnet for fraud. Although the SBA will be able to audit lenders and borrowers later, it will fall primarily to private bankers to make decisions about who should receive the taxpayer-backed loans.

“This is an unprecedented expansion of SBA lending that will take some time before it’s fully functioning,” said Rob Nichols, president of the American Bankers Association.

The government is guaranteeing 100 percent of the loan’s value, meaning banks are repaid by taxpayers if the business fails to repay the loan. But community banks are also concerned about the loans’ low interest rate, which was increased from 0.5 percent to 1 percent following complaints from banking associations. The law allows for a maximum interest rate of 4 percent.

In a mark of the frenetic pace with which federal agencies are trying to get money out the door, final regulations for the program were not released until just hours before the program was scheduled to begin.

The Post's Jeff Stein explained March 18 why the White House and Congress are moving swiftly on economic stimulus amid the coronavirus outbreak. (The Washington Post)

The federal guidance release addressed many of the industry’s concerns. Banks aren’t required to verify the accuracy of the documents a borrower submits with their application, removing the risk that the lender could be held legally liable for fraudulent behavior.

Still, the industry warned it would take time to fully implement.

“Having just received guidance outlining how to implement a $349 billion program literally hours before it starts, we would ask for everyone to be patient as banks move heaven and earth to get a system in place and running to help America’s small businesses and the millions of men and women who work at them,” Richard Hunt, president and CEO of the Consumer Bankers Association, said in a statement.

The program requires small businesses to spend 75 percent of their loan on keeping workers employed to have the loan forgiven. If not, the borrower may be forced to repay the loan and may not be eligible to have it forgiven. That may limit the program’s appeal to some small-business owners

Small-business owners say they are in limbo and can’t make critical decisions until the program is operational. Some worry that the fund — which officials say is first come, first served — is not large enough and that they might not get approved in time to claim their share.

Some banks’ hesitation to jump into the program is frustrating, said Phil Rodocker, a real estate agent in Seattle who is seeking a loan.

“We gave them tons of money to bail them out back in 2008, and now they won’t help us,” Rodocker said. “They took the money … but now 10 years later the government is asking them to help and they are basically throwing the finger at us.”

Bank of America, one of the few big banks to begin offering loans Friday morning, said it was moving quickly to meet loan requests. By the end of the day, it had received 85,000 applications for $22 billion in loans.

The bank has focused on its business customers with loans first but will be expanding access quickly, Dean Athanasia, the head of Bank of America’s consumer business, said in a note to employees. “We will expand our process soon,” Athanasia said.

Bank of the West, a small community lender in Texas, is juggling applications from hundreds of its own customers but also received calls from more than 300 small businesses with accounts at big lenders, including Bank of America, that aren’t yet accepting applications, said Cynthia Blankenship, corporate president of the bank.

“They need to step up and stop hiding behind all of these excuses,” she said of the big banks. “None of us are totally prepared for this but we’re breaking our back to get prepared.”

Redwood Credit Union in Santa Rosa, Calif., conducted a “controlled” test of the emergency lending system Friday with an application from one customer.

“We got the approval right away and funded” the loan, said Brett Martinez, the credit union’s president and chief executive. “It was a controlled environment, we know the member very well.”

Other applicants will have to wait until the SBA provides finalized loan documents before their loans are funded, and that is not likely until next week, Martinez said. “Getting dollars out early next week, we would see that as a win,” he said.

SBA and Treasury Department officials say their priority is to get cash in the hands of struggling small businesses and avoid the normal seven-day review process.

“There really has never been a product like this in our history, with not only the streamlined nature but the fact that there is very little underwriting required in terms of personal guarantees, no collateral, no requirement for credit elsewhere,” said Steve Bulger, an East Coast regional SBA administrator. “We are going to move forward as fast as we can because we know the need right now is to get the money out there.”

Even after the emergency fund launched, there was conflicting information about basic issues with the program, said Brock Blake, chief executive of the Salt Lake City-based financial technology company Lendio. Lendio wants to offer loans through the program but is still reviewing the rules, he said.

“It will be a disaster out of the gates, but at some point we will plug the holes, fix the problems and overcome all of these miscommunications because we have to,” Blake said. “Every day that we don’t, someone is going out of business or laying people off.”

Have a tip or story idea about the federal government coronavirus rescue package known as the CARES Act? Send us an email: