Small business loan program and its problems restart
Joyce M. Rosenberg
The second round of loan applications for the government small business assistance program was hampered by computer problems at the Small Business Administration.
Lenders complained Monday that they could not get their applications entered into the SBA system known as ETran which processes and approves the loans. The agency said it informed lenders on Sunday that it was limiting the number of applications a lender can submit at a time.
The SBA began accepting applications at 10:30 a.m. Eastern time for $ 310 billion in funding. The program’s initial $ 349 billion was used up in less than two weeks after the approval of more than 1.7 million loans. This first round was also slowed down by computer problems at the SBA.
Banks had thousands of apps ready to send on Monday. Richard Hunt, chairman of the Consumer Bankers Association business group, said the SBA’s change was too last-minute – bankers had already sent big batches of requests to the agency, unaware that a new process was planned .
“We learned in the 11th hour that the SBA had changed their process. They could have told us well in advance,” Hunt said. He said the agency’s computers were unable to accommodate even the reduced number of applications per hour that it had expected.
The new round of funding had to proceed quickly as banks already had thousands of applications on hand and were accepting more pending Congress approval of the additional funds. If the new funds are used up, there is concern that many companies will be left out unless lawmakers are willing to approve a third round.
The loans provide a rebate of the money that the owners spend on the wages of the workers. Millions of workers have lost their jobs as businesses such as restaurants, retailers, gyms and entertainment venues have been forced to close to curb the spread of the virus.
Bankers across the country were struggling to get into the SBA system on Monday, said Paul Merski, vice president of the Independent Community Bankers of America.
“Some have tried all day since it opened,” Merski said. “It’s no different from what happened at the original launch.”
Carol Wilkerson, a spokesperson for the SBA, said in a statement that the agency has created a mechanism that is slowing the pace of requests from any lender at a time.
“If a lender goes over the stimulus limit, they will have an expiration period,” she said.