As businesses around the U.S. wait eagerly for loans from the $2 trillion stimulus package passed by Congress, the Small Business Association (SBA) may be struggling with the workload.
Many businesses, it seems, have not yet received the money they need to keep afloat as the coronavirus continues to keep their doors closed. Larry Kudlow, director of the National Economic Council, said there had been 178,000 loans for $50 billion total approved thus far — but that hasn't been the experience enjoyed by small business owners, according to the New York Times on Tuesday (April 7).
However, lenders have been frustrated by the slow-paced systems of the SBA, with hours-long waits to speak with anyone on the phone and a website that has been known to crash under the pressure of the enormous demand for funds.
And many banks are worried about a seeming lack of direction. The SBA's guidance thus far, banks say, has left gray areas where they might not have legal cover to grant loans to some businesses. The banks have been going ahead with those loans anyway, with the possibility that the SBA could later have a technical objection to some loans. That would mean the banks would be unable to take back the sums they're handing out at a later date.
For instance, the SBA insists that banks use a specific form to close a loan, but the form hasn't been updated, and the language has been inconsistent with what the paycheck program asks for in the loan process.
To help out, some banks have just been going ahead and fixing everything up anyway, in the hopes that banks move forward with closing the loans even despite the incongruity.
But because of the numerous confusions and inconsistencies, even borrowers who have completed everything satisfactorily might not have received money — the banks opt not to disburse the money yet with the unknown variables present.
Some banks have forged ahead on just their own devices, among them New Jersey-based ConnectOne Bank. Chief executive Frank Sorrentino confirmed, according to published reports, that the bank had already begun distributing loans to borrowers.