According to Bloomberg, banks are hesitant to participate in the Paycheck Protection Loan program because their fear repercussions if they approve a loan that later turns out to be fraudulent. 

The basic economic problem right now is that a lot of companies have shut down and aren’t earning any money. The ordinary reaction, for a company that doesn’t make stuff or earn any money, is to go out of business and lay off all of its workers, but it is pretty widely recognized that that would not be a good reaction, for most businesses, right now.