This week will be the biggest test yet for the so-called Paycheck Protection Program, which Congress created to get money as quickly as possible to small businesses to stave off mass firings as the economy shuts down.
A key feature of the plan is that the government will forgive the loans if businesses maintain their payrolls. The Trump administration pressed banks to launch the program Friday to rocky results after waiting until the night before the rollout to issue guidelines to the industry.
Even after working through the weekend to shore up their systems and work on loan applications, lenders on Monday continued to report significant problems standing in the way of the small business rescue.
Not only was the SBA system used to process the loans breaking down, it was also requesting loan documentation that lenders didn’t think they’d have to provide, industry sources told POLITICO. To make matters worse, banks still didn’t have the template of a key SBA form needed to close out loans and were preparing to come up with their own if the government didn’t deliver. They faced unanswered questions about how to tally payroll costs in the loan applications.
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.
Bank of the West Corporate President Cynthia Blankenship said “things are still super crazy.” The Grapevine, Texas-based bank is receiving hundreds of calls and emails per hour, she said. With limited funding available, it was becoming a race against time.
“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.”
At about 6 p.m. Monday, a SBA spokesperson said “the system is up and running.”
“We continue to process, approve, and guarantee billions of dollars of loans per hour,” the spokesperson said.
There was no lack of enthusiasm among some banks. Bank of America, the first of the biggest U.S. lenders to offer the loans last week, reported Monday morning that it had received 212,000 applications seeking nearly $36 billion.
More banks continued to join the effort but the industry’s show of force was uneven.
Wells Fargo announced Sunday night that it would only be able to offer $10 billion in loans because of constraints the Fed had imposed on its growth as punishment for widespread customer abuse over the last several years. JJPMorgan Chase, which began taking applications last week, took down and relaunched its web page for applications Monday as it made updates that it said would allow it to accept more loan requests. Citigroup, which did not offer the loans last week, said it planned to launch its loan portal Monday.