The second round of Paycheck Protection Program (PPP) funding was an instant replay of the first, as the loan network collapsed from the tsunami of applications from small businesses desperate for relief.
“All of the reports I have around the country is that it’s been a disaster,” Paul Merski of the Independent Community Bankers of America told The Washington Post (WaPo) on Monday (April 27). “Bankers have been locked out most of the day. It’s been frustrating.”
Some bankers took to social media to express their frustration with the Small Business Administration (SBA) and its inability to process the loan applications.
“Our member banks across the country are deeply frustrated at their inability to access @SBAgov’s E-Tran system. We have raised these issues at the highest levels. Until they are resolved, #AmericasBanks will not be able to help more struggling small businesses," Rob Nichols, president and CEO of the American Bankers Association, tweeted.
This is just the latest issue with the PPP small business loan program that is intended to help small businesses economically crippled due to the coronavirus pandemic. The program has faced mounting criticism due to system failures and misrouted funds that benefited big businesses and banks’ preferred clients.
When the $310 billion program initially opened on April 3 for the first wave of assistance, the intention was to get money into the hands of the neediest businesses. Instead, publicly traded companies, nationwide franchises and banks’ preferred customers got the funds. The NBA Lakers was the latest entity to return their PPP loan money after learning that the fund was quickly depleted and left the most desperate of businesses on the sidelines.
The second round of funding approved last week for $349 billion was supposed to rectify that, and the anticipation was that the money would go fast. Instead, technology issues persisted, leaving many unable to apply.
The Treasury Department and the SBA estimated that more than 1.66 million small businesses received loans in the first round of funding.
“As of 3:30 pm EDT today, the SBA has processed more than 100,000 PPP loans by more than 4,000 lenders. Unprecedented demand is slowing E-Tran response times. Currently, there are double the number of users accessing the system compared to any day during the initial round of PPP. SBA is actively working to ensure system security and integrity while loan processing continues. SBA is working around the clock to help all U.S. small businesses during these challenging times,” an SBA spokeswoman told ABC News in a statement.
The latest PYMNTS study of more than 1,200 SMBs indicated the loans are viewed not just as a “must have” need to navigate the current challenges, but also as a tool that can be used strategically, to position SMBs in a post-pandemic world.