The rapid rollout of the SBA Paycheck Protection Loan (PPP) program is plagued with technical issues, according to a report from NBC news.
The primary problem is that computer systems between banks and the SBA are having problems communicating with each other. Banks have resorted to entering the borrower’s information manually into ETRAN, the SBA’s loan processing portal.
Before a bank can send the loan application to the SBA, they must go through an interview process to confirm the information provided by the borrower. This step should find errors or omissions, and in theory, increase the speed at which the SBA can approve the loan.
At every step of the way, all parties involved are trying to solve technical issues and make the process more automated where possible.
Some large banks such as Bank of America and JPMorgan Chase were ready to accept PPP loan applications Friday morning, others opened up their web portals on Saturday (ie; Wells Fargo), and some are still working to have their portals ready as quickly as possible (ie; Citi).
By all accounts, it appears everyone is trying to work through these teething issues to make the process smoother in the coming days.
Expect More Problems
With many small business owners just getting their finances in order over the weekend to be able to apply for the PPP loan next week, more issues and problems are likely to arise.
This means more uncertainty about the status of loan applications and when the money will flow into the accounts of the businesses that need to pay their employees.
Because there is a finite amount of money available from the coronavirus stimulus packages, there is a fear among small business owners and groups that the program could run out of money.
In response, President Trump tweeted on Saturday, “I will immediately ask Congress for more money to support small businesses under the #PPPloan if the allocated money runs out.”
Also, leaders of both parties in Congress already acknowledge a fourth coronavirus relief bill will very likely be necessary, which could include more help for small businesses.
Was The SBA Ready?
Any government program developed in just about a week’s time will have a rocky start, and this one was no exception.
In Fiscal 2018, the SBA approved about 71,000 loans in the 7(a) loan, 504 loan, and Microloan categories, totaling more than $30.2 billion.
However, the agency also worked on 284 active disaster assistance declarations and approved more than 140,000 disaster loans totaling nearly $7.0 billion.
Source: 2018 SBA Financial Report
In the report, the SBA also said in fiscal 2018 it “…processed 337,722 disaster loan applications in the second largest disaster season in SBA’s history from hurricanes Harvey, Irma, and Maria with an average application rate of 4 loans per specialist per day.”
In the best of times and when spread out over a year, the agency appears to have resources to manage a large number of loan applications.
However, it’s very plausible the agency doesn’t have the same staffing resources right now because of social distancing guidelines.
The sheer volume of daily applications is going to strain an agency that is being tasked to fund 10 times its normal volume in Dollars in a very condensed period of time.
For small businesses trying to survive the next week or two, this will be a challenge.
The bottom line for small business owners is to get the loan application into the system as soon as possible, even if they have cash on hand to cover the next month or so.
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