This week will be the biggest test to date for the so-called paycheck protection program, which Congress has created to deliver money as quickly as possible to small businesses to avoid mass layoffs while the economy stops.
A key feature of the plan is that the government will cancel the loans if the companies maintain their payroll. The Trump administration urged banks to launch the program on Friday to rocky results after waiting until the night before the deployment to issue directives to the industry.
Even after working over the weekend to consolidate their systems and work on loan applications, lenders continued to report significant problems preventing the rescue of small businesses on Monday.
Not only was the SBA system used to process loan disruption, it also asked for loan documents that lenders did not expect to provide, industry sources told POLITICO. To make matters worse, the banks still lacked the template for a key SBA form needed to close loans and prepared to offer theirs if the government failed to act. They were faced with unanswered questions on how to calculate salary costs in 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 from borrowers.
“Now we are just waiting for SBA,” he said.
Bank of the West President Cynthia Blankenship said “things are always super crazy”. The Grapevine, Texas-based bank receives hundreds of calls and emails an hour, she said. With limited funding available, it was becoming a race against time.
“It’s like a feeding frenzy with participating banks trying to get into the SBA portal to get the necessary permissions on each customer,” said Blankenship. “I hope that we, as community banks, are not at the back of the queue and that the bigger banks come in and take out the licenses first. “
Around 6 p.m. Monday, an SBA spokesperson said that “the system is operational.”
“We continue to process, approve and guarantee billions of dollars in loans per hour,” said the spokesperson.
There was no shortage of enthusiasm among some banks. Bank of America, the first of the largest US lenders to offer these loans last week, announced Monday morning that it had received 212,000 applications for nearly $ 36 billion.
More banks continued to join the effort, but the industry’s show of strength was uneven.
Wells Fargo announced Sunday night that it could only offer $ 10 billion in loans because of the constraints the Fed had imposed on its growth as a punishment for widespread customer abuse in recent years. JJPMorgan Chase, who started taking requests last week, withdrew and relaunched his requests web page on Monday as he made updates which he said would allow him to accept more loan requests. Citigroup, which did not offer loans last week, announced plans to launch its loan portal on Monday.