WASHINGTON–Five days into the $349-billion Paycheck Protection Program the federal government reported it had approved approximately 178,000 loans for businesses of 500 employees or fewer totaling about $50 billion. And that’s where the bottleneck is now being encountered.
As CUToday.info has reported, the Small Business Administration has been overwhelmed with applications from SBA-approved lenders on behalf of borrowers. The SBA typically backs approximately $30 billion in small business loans each year.
But while the government is reporting the big numbers that continue to grow, financial institutions as well as the small businesses that have been approved have told multiple media outlets they have yet to see much of that money. As a result, many are seeing the near daily reports from the Trump Administration hailing the success of the program and are becoming worried they are being left out, noted the New York Times.
‘Never Realistic’
“The expectation that this $2 trillion package would go through Congress and that the money would be flowing three days later, that was never a realistic expectation,” Patrick Ryan, CEO of First Bank in New Jersey, told the Times. “But I get why people are frustrated.”
Also in New Jersey, of the 75 small businesses that worked with attorney Scott Salmon on their applications, fewer than 10 had been notified their loans were approved several days after their applications, and none had received money.
The Times report went on to note, “Lenders say they are being hamstrung by the S.B.A.’s slow-moving systems. Some lenders simply can’t get access to the agency’s online application system — which went down for more than an hour on Monday — to submit borrower information quickly and at high volumes. They are frustrated at having to wait for hours to connect to S.B.A. officials by phone for help. Requests for more logins, which would allow more bank employees to input borrower data to process loans faster, have been ignored or denied.”
Some banks did tell the Times they have been able to fund loans under the program.
One Concern Addressed
One concern voiced by a number of smaller financial institutions that they had no place to sell the loans in order to recoup some of the costs has been addressed by the Federal Reserve. As CUToday.info reported here, the Fed is creating a new facility for purchasing the loans.
The SBA told the Times the agency had added features to help borrowers and lenders in recent days. It has received $675 million from Congress to lift its operating budget and invest in new and expanded solutions.
The SBA has also built out a portal to allow lenders that have not worked with the agency before to begin offering loans. Sen. Marco Rubio (R-FL), who chairs the Senate’s small business committee, said the portal was being developed with Amazon Web Services along with an unnamed “systems integrator.” That portal went online on Tuesday, April 7.
As CUToday.info reported earlier, the Treasury Department and Congress are working on an additional $250-billion in funding for the program.