The second round of loan applications for the government’s small business relief program has been slowed by computer issues at the Small Business Administration, according to an AP report.
Lenders complained Monday that they couldn’t get their applications into the SBA system known as ETran that processes and approves loans. The agency said it notified lenders Sunday that it was limiting the number of applications any lender could submit at once.
The AP reported that the SBA began accepting applications at 10:30 a.m. Eastern time for $310 billion in funding. The program’s initial $349 billion was exhausted in less than two weeks after more than 1.7 million loans were approved. That first round was also slowed by computer issues at the SBA.
Banks had thousands of applications ready to go Monday. Richard Hunt, president of the trade group Consumer Bankers Association, said the SBA’s announcement on application limits was too last-minute — bankers had already sent large batches of applications to the agency, not knowing that a new procedure was being planned.
“We learned at the 11th hour that SBA had changed its process. They could have told us well ahead of time,” Hunt said. He said the agency’s computers weren’t able to accept even the reduced number of applications per hour that it had planned.
CNBC reported that the government’s Paycheck Protection Program sparked outrage after its initial $350 billion allotment quickly ran out and it was revealed that big public companies secured loans while hundreds of thousands of small businesses seeking relatively tiny amounts were left in limbo.
Last week, the Small Business Administration attempted to close that loophole, saying that big public companies “with substantial market value and access to capital markets” aren’t eligible and that firms that already tapped the fund had two weeks to return the PPP money, according to the CNBC report.
Since then, companies including Ruth’s Hospitality Group and sandwich chain Potbelly have followed Shack Shack in returning their PPP funds.
CNBC reported that more than 245 public companies applied for at least $905 million from the government program that was billed as for small businesses without access to other sources of capital, according to Washington D.C.-based data analytics firm FactSquared.
That includes $126.4 million for three public companies affiliated with Texas hotelier Monty Bennett. One of those firms, Ashford Hospitality Trust, applied for $76 million in 117 separate loans, the most by a single company, according to regulatory filings.
AP reported that the ETran system normally handles under 60,000 applications in a year and wasn’t built to handle the volume of applications it has been receiving this month.
The fresh round of funding was expected to go quickly because banks already had thousands of applications in hand and were accepting more as they waited for Congress to approve the additional money. If the new funds do get depleted, it’s feared that many companies will be shut out unless lawmakers are willing to approve a third round.
The loans offer forgiveness for the money owners spend on workers’ pay. Millions of workers lost their jobs as companies such as restaurants, retailers, gyms and entertainment venues were forced to close to curb the spread of the virus. (AP)