The federal government fumbled the reboot of the popular Paycheck Protection Program on Monday, with bankers saying just a fraction of loan applications managed to get through a balky system at the U.S. Small Business Administration.
“One banker told me it took three hours to get a single loan application processed,” said Paul Merski, executive vice president of the Independent Community Bankers Association, a trade group that represents 5,000 small and midsize financial institutions. “It was a very frustrating and challenging rollout.
After small businesses snapped up $349 billion in forgivable loans that were initially provided as part of the government’s $2 trillion coronavirus relief effort, Congress allocated another $310 billion to the program. The money is expected to be gone by the end of the week. The first round of funding lasted 13 days.
“Banks have been accepting applications and processing loans since the money ran out in mid-April, so there was a tremendous volume of loans just sitting there, ready to go,” Merski said.
Merski said community banks alone tried to file “hundreds of thousands” of applications Monday, but he said just a “handful” got through. By the end of the day, SBA officials announced that just 100,000 loans had been processed for 4,000 lenders.
“Unprecedented demand is slowing our system response times,” SBA Administrator Jovita Carranza said in a tweet. “Currently, there are double the number of users accessing the system compared to any previous day during the first round of Paycheck Protection Program funding.”
Merski said the SBA’s system is not capable of handling the large volume of applications going into the system. The agency initially allowed banks to submit 15,000 applications at a time, but reduced that to batches of 5,000 later in the day after the system was overwhelmed.
“They are the volume in one day that they usually do in a year,” Merski noted.
Merski said lenders worked through the night, hoping the flood of funding requests would subside at some point.
“Bankers were sitting in front of their computers, refreshing every 15 minutes to try to get into the system,” Merski said. “But they had very little success. Some banks weren’t able to get any applications through. Others had 500 applications, and maybe got 50 processed.”
———
©2020 Star Tribune (Minneapolis)
Visit the Star Tribune (Minneapolis) at www.startribune.com
Distributed by Tribune Content Agency, LLC.