The Paycheck Protection Program (PPP), which is intended to distribute loans to small businesses affected by coronavirus pandemic shutdowns, resumed activity on Monday (April 27) and it wasn’t even a full day before more reports of now-familiar glitches and delays resumed as well.
This next round of the PPP entails a $310 billion haul for banks to loan to businesses in need. This is a follow-up of the original $349 billion round from the CARES Act passed in March; the first round was depleted by April 16.
The Small Business Administration (SBA) system was almost immediately overwhelmed by the number of applications, and things were further confused by a somewhat different method of applying, banks said, which was only introduced at the last minute.
The difference came in the number of loans banks were allowed to submit at one time. Initially on Monday, that number was set at 15,000 per bank, but due to the realization that the system wouldn’t sustain that much at once, the number was lowered to just 5,000 per bank by midday.
The SBA is also capping the amount of loans processed for each bank, setting the limit at $60 billion per bank to prevent excess grabs.
Banks submitting individual loans through the SBA’s ETrain system have also run into problems, where blockage times were extended and the system didn’t work as it should. Spokesman Jim Billiboria said the glitches were to be expected because the number of loans some banks were submitting — if they put in too many at once, they would get timed out. Billiboria said banks were warned about this ahead of time.
Even so, some business owners haven’t received funds they were waiting for from the first round of PPP funding. Of the 30 million small business owners eligible for the funds in the U.S., only about 1.6 million got anything from the PPP thus far.
At issue, also, is the fact that many publicly traded, larger companies took money from the PPP the first time around. To remedy that, the SBA introduced new guidelines it says will ensure that companies with large values and access to capital won’t be able to get the money from now on.