The SBA’s Paycheck Protection Program (PPP) received over 17,000 completed applications on Friday valued at more than $5.4 billion, according to a tweet from Jovita Carranza, Administrator of the SBA.
Latest #PaycheckProtectionProgram numbers: 17,503 loans valued at more than $5,400,000,000. @SBAgov + over 1,100 local lenders helping small businesses stay afloat with working capital to keep employees paid + doors open.
— Jovita Carranza, SBA (@SBAJovita) April 3, 2020
For PPP, small business owners had to use one of the 1,100 plus participating lenders to apply for the loan that is potentially forgivable under certain circumstances.
This process differs from the Economic Injury Disaster Loan program which provides up to $10,000 in an SBA advance and is managed and funded directly by the U.S. Treasury and does not have to be paid back.
The 17,503 PPP applications Carranza reported represents the number of applications transmitted from lenders to the SBA. It’s not the total amount of applications received by lenders, which is a far larger number.
Bank of America (BOA) said it received over 85,000 applications requesting $22.2 billion.
Presumably, the difference in applications received by banks and the SBA is the time it takes for banks to process the applications before they send them to the SBA.
Bank of America – First One Out – But Faced Criticism Too
Despite or because of it being the only large bank ready to go at 9 am on Friday, it received the most applications on Friday, but also faced criticism.
Several business owners went on social media outraged the bank wouldn’t accept their loan applications because they didn’t have a previous lending relationship with them, despite being customers of the bank.
In support, Florida Senator Marco Rubio tweeted a reminder to Bank of America that this was not the law they passed.
The requirement that a #SmallBusiness not just have a business account but also a loan or credit card is NOT in the law we wrote & passed or in the regulations.
This is a @BankofAmerica requirement not a govt one.
They should drop it. This money is 100% guaranteed by fed govt. pic.twitter.com/cG2i9eqi7k
— Marco Rubio (@marcorubio) April 3, 2020
Later in the day, Bank of America Chief Executive Brian Moynihan explained to CNBC it was going through a ramp-up process and very soon borrowers no longer will need an existing lending relationship with the bank to access the funds.
There were already hints of problems and restrictions Thursday night as many banks received guidance from the SBA very late in the day.
The size of the program and the speed it was being deployed certainly invited errors and miscommunication problems that have to be resolved as the PPP program rolled out.
With the weekend to catch up and adjust their processes, most banks should be in better shape on Monday to accept more PPP loan applications.
The next question to be answered will be how quickly the SBA can turn around these PPP applications so that funds can flow into the accounts of the small businesses that need the money now.
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