Small businesses flooded lenders with emergency loan applications on Friday morning as the spigot opened on $350 billion in relief money.
Treasury Secretary Steven Mnuchin said that community banks had processed 700 loans for $2.5 million before 9 a.m. An hour later, he said the total was up to $4 million, a sign of the surging demand. Larger banks are expected to go live later in the morning, Mr. Mnuchin added.
A senior Treasury official said that Mr. Mnuchin has been receiving continuous updates from counterparts at the Small Business Administration throughout the morning. The community banks were ready to go first thing, then Bank of America went live at 9 a.m. Other larger banks have been lagging in their readiness, the official said.
The program is the centerpiece of the Trump administration’s economic stabilization effort and comes as government figures showed that 701,000 jobs were lost last month.
Lenders and borrowers have been bracing for a chaotic start to the program, which was assembled by the Small Business Administration and the Treasury Department in just a week. There has been mass confusion about the terms of the loans and the application form that borrowers are supposed to use.
The Treasury Department changed the terms of the loans, increasing the interest rates that banks get from 0.5 percent to 1 percent, on Thursday evening. Mr. Mnuchin posted the final version of the form on Twitter at 10:43 p.m. on Thursday night.
“I expect it to be a train wreck,” Brock Blake, chief executive of the small business lending marketplace Lendio, said of the first day of the program.
U.S. stocks were lower and indexes in Europe fell on Friday, setting the stage for a downbeat end to another turbulent week in financial markets.
The S&P 500 was down by more than 1 percent in early trading. Investors were digesting more painful economic data — this time, the monthly employment report from the Labor Department that showed the nearly decade-long run of job growth had ground a halt in March.
But oil prices rose sharply on Friday, with Brent crude rising as much as 10 percent, extending Thursday’s gains on word that major oil producers would meet to discuss the falling demand for petroleum.
The Organization of the Petroleum Exporting Countries, under pressure to end a price war with Russia that has thrown oil markets into turmoil, is planning to hold a teleconference on Monday to discuss world oil supplies, an OPEC delegate said on Friday. The meeting will include the OPEC+ group of producers, which includes Russia, and other countries “if they wish,” the delegate said.
It was not clear if the United States would take part in the meeting.
President Trump has been leaning on Saudi Arabia and Russia to end the damaging price war that the Saudis launched after Russia declined to agree to new production trims at a meeting in Vienna in early March.
The jousting between the two major producers has accelerated the collapse of oil prices, which fell about 55 percent in March. Plunging oil prices threatened to destabilize countries and regions where the local economy depends on oil production.
The Labor Department on Friday reported the first monthly job loss in almost a decade, reflecting the virtual economic standstill wrought by the coronavirus outbreak.
It was an abrupt end to a landmark stretch of job creation — 113 months in a row, more than twice the previous record.
Compared with the numbers of people recently applying for unemployment benefits — nearly 10 million in the previous two weeks — the figure announced Friday was modest: a loss of 701,000 jobs. But the data was mostly collected in the first half of the month, before stay-at-home orders began to cover much of the nation.
“This is nothing compared to what we’re going to see,” said Stephanie Pomboy, president of MacroMavens, an independent research firm. Indeed, the March unemployment rate of 4.4 percent may be replaced by double digits as soon as next month. But it was the largest monthly increase in the rate, by 0.9 percentage points, since January 1975.
The Congressional Budget Office said on Thursday that it expected unemployment to top 10 percent for the second quarter of 2020 — as high as the peak in the last recession — and to remain at 9 percent at the end of 2021.
The manufacturing giant 3M said Friday that it has been “working closely” with the White House to shore up its supply of face masks to the United States after President Trump took aim at the company on Twitter.
“The administration requested that 3M increase the amount of respirators we currently import from overseas operations into the U.S.,” the company said in a statement. “We appreciate the assistance of the administration to do exactly that.” For example, the company said, it had gotten approval from China to export 10 million N95 masks to the United States earlier in the week.
But 3M also said that the White House had asked it to stop exporting respirators that are currently manufactured domestically. Such a request, the company said, would put health care workers in Canada and Latin America at risk, and could cause other countries to retaliate by cutting off important supplies of protective equipment to the United States.
The response from 3M, one of the world’s largest suppliers of masks, comes after President Trump criticized the company in a late-night tweet on Thursday.
“We hit 3M hard today after seeing what they were doing with their Masks. ‘P Act’ all the way.’ Big surprise to many in government as to what they were doing – will have a big price to pay!” the president tweeted.
Earlier in the day, at a White House press briefing, Mr. Trump had announced he was invoking the Defense Production Act, a 1950s-era law, to spur companies to increase their production of masks.
Grants, low-interest loans and other government support might seem like manna for businesses under financial strain. But some chief executives and corporate boards might balk at the offer of billions of dollars in aid to help them ride out the coronavirus pandemic and keep the economy from sliding into a deep recession.
Already, some corporate leaders are bristling at the potential terms of the grants and loans authorized by the stimulus legislation President Trump signed last week. Boeing’s chief executive, David Calhoun, for one has suggested that the aerospace company could raise money elsewhere if it found the government’s terms too onerous.
The Treasury Department, led by Steven Mnuchin, a former investment banker, might try to avoid imposing conditions that companies find burdensome. But if the aid appears too lenient, popular support for the rescue could evaporate as it did with the bailout of banks and other businesses after the 2008 financial crisis. And some lawmakers and experts argue that Mr. Mnuchin ought to resist the temptation to cut businesses too sweet a deal to prevent them from walking away from the government’s offer.
Seeking to reverse a nationwide economic slowdown caused by the coronavirus pandemic, China’s central bank announced on Friday that it would give the country’s commercial banks two sizable incentives to lend more money.
The People’s Bank of China told small and medium-sized commercial banks that they would be allowed to hold less of their deposits as reserves at the central bank. This would let them lend the money, an estimated $56 billion, to cash-strapped businesses instead.
It is about half the amount freed up by an earlier cut in the so-called reserve requirement ratio announced on New Year’s Day. That cut, involving $118 billion, applied to large banks as well as small and medium-sized ones.
The central bank also said that it would pay interest of only 0.35 percent on money parked with it by banks in excess of their mandatory minimum reserves. The interest rate paid to banks on their excess reserves had been locked at 0.72 percent since late 2008, when it was cut from 0.99 percent in response to the global financial crisis.
Based on central bank data, these excess reserves totaled nearly $700 billion at the end of last year. If banks now lend a large chunk of that money in response to earning less interest on it, that could have a bigger effect on the economy than the change in the reserve ratio.
Google will provide user location data for virus tracking.
Google said it is using the data it collects about where people go to help governments and public health officials evaluate the effectiveness of policies — like sheltering in place and working from home — designed to thin crowds in public places.
In a blog post early Friday, Google said it is publishing so-called “mobility reports” for 131 countries based on aggregated and anonymized location data from Google Maps users to show recent changes in travel patterns. There are also regional breakdowns. In the United States, Google will detail data for all 50 states and counties within those states.
The reports derive from how Google Maps taps into location data to offer users information about how busy restaurants or stores may be on a certain day of the week or time of day. Google said it is using “Location History” data provided by users. The feature is not on by default, and users must opt in to share location data with the company. The company said it will share the data in aggregate so individual movements are not revealed.
Catch up: Here’s what else is happening.
The sportswear giant Under Armour said Friday that it was laying off 6,700 employees that work in its retail stores as well as some in its distribution centers, beginning April 12. Employees who continue to work at the distribution center will receive bonuses. Under Armour had been struggling well before the coronavirus crisis.
Reporting was contributed by Nelson D. Schwartz, Patricia Cohen, Alan Rappeport, Stanley Reed, Peter Eavis, Rachel Abrams, Niraj Chokshi, David Gelles, Daisuke Wakabayashi, Keith Bradsher, Jim Tankersley, Julie Creswell, Carlos Tejada and Daniel Victor.