April 27, 2020; Washington Post
The Paycheck Protection Program, round two, had yet another bad launch yesterday when the US Small Business Administration (SBA) portal crashed at the start of the first day of applications for the second round of loan money. This comes as small lenders, afforded a carve-out for loans they are initiating, have entered the fray in force.
It was only few minutes after the 10:30 launch time that lenders began to experience problems accessing the SBA’s E-Tran loan processing system. Whereas in the previous round the guidelines and application forms were published only the night before, this time many lenders had the applications from nonprofits and small businesses ready to go. That was the advice we gave our readers last week: prepare your applications and find a friendly bank, and so many of you did, even as one corporation after another was exposed for eating up tens of millions of the available pot.
Some of the larger banks, it turns out, gave first priority to larger clients, many worth billions themselves, who submitted loan applications for their multiple locations. Large restaurant chains, hotel chains, and NBA teams got in on the money grab meant for smaller entities with less capital on hand. Billionaire hotel mogul Monty Bennet managed to pull down $96.1 million after having laid off nine percent of his employees in March. That money will likely be used only as a low-interest loan, with no resultant jobs saved and many small businesses lost.
Meanwhile, for those still waiting, the application process turned glitchy within minutes.
“Trying to do hundreds of PPP loans and Etran immediately crashed! So frustrating not to have access funding for so many small businesses!” tweeted Cynthia Blankenship, corporate president of Bank of the West, a small community lender in Texas.
“All of the reports I have around the country is that it’s been a disaster,” said Paul Merski of the Independent Community Bankers of America. “Bankers have been locked out most of the day. It’s been frustrating.”
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Still, by 3:30 p.m. the SBA had processed 100,000 loans; reportedly, twice as many people had tried to access the site as on any day of the first round of funding.
The TAB Bank in Utah tried to get ahead of things having 1,200 applications in hand by yesterday morning, but Curt Queyrouze, the bank’s chief executive, says that by the afternoon their small army of loan processors (expanded from 10 to 20 for the purpose) had only managed to submit five.
“I have been sitting here watching my screen refreshing for three hours,” Queyrouze confessed. “The entire time we’ve been talking, it’s said ‘loading.’”
Queyrouze had spent the morning trying to submit an application for a small business with just three employees. He says he’s going to “fight for these small businesses” even if it takes an all-nighter. “I don’t know when the money is going to run out, and we’re going to give it our all.”
The Main Street Alliance, an advocacy group representing small businesses, argues that there are still serious problems with the program, which allows banks to submit 5,000 applications at a time if they are able to do so. Critics say this gives large banks an advantage.
“The dangerous inequities we saw with the first round will not be resolved” in the second round of funding, says Amanda Ballantyne, national director of Main Street. “With funding likely to run out in 48 hours, it is ludicrous that Congress thinks it has already done its job supporting small businesses.”—Ruth McCambridge