The Paycheck Protection Program (PPP) introduced April 3 is experiencing more setbacks as the Small Business Administration (SBA) works to solve computer system problems, according to a report in Politico on Monday (April 6).
The PPP is a $350 billion small business loan program that is part of the $2 trillion Coronavirus Aid, Relie and Economic Security Act (CARES). Loans will be forgiven if businesses keep paying their workforce.
Banks have been struggling to meet the demands of businesses seeking the SBA-backed loans. Myriad problems — including technical issues — have been ongoing since the program launched.
The SBA computer system crashes added to the problems lenders have been experiencing as they try to maintain minimum balance sheet assets while meeting the high demand for loans. The computer issues stemmed from the SBA’s “E-Tran” system used to authorize the loans.
“Throughout the course of the day, it’s been up and down,” Rebeca Romero Rainey, president and chief executive officer of the Independent Community Bankers of America. “That’s been the experience since this all went live.”
The Trump administration pushed to launch the program on Friday (April 3), but just a handful of banks were able to start processing loans.
The SBA system was also requiring documentation that the banks “didn’t think they’d have to provide,” industry sources told POLITICO.
Further, lenders don’t have a template for a critical SBA form and they also have multiple questions about payroll costs that have gone unanswered.
Mark Hesser, president of Pinnacle Bancorp in Omaha, Nebraska, said his team “worked all day and night over the weekend to review information coming in from borrowers.”
“Now we’re just waiting for SBA,” he said.
The Grapevine, Texas-based Bank of the West Corporate President Cynthia Blankenship said: “things are still super crazy.”
“It is like a feeding frenzy with the banks who are participating to try to get into the SBA portal to get the necessary authorizations on each customer,” Blankenship said. “I hope we, as community banks, aren’t being put at the back of the ever-waiting line and the bigger banks are getting in and taking the authorizations first.”
Bank of America was reportedly the first large bank able to take digital applications for the PPP.