Banks say that electronic loan portal for small business relief program is to blame for delays - CNBC

Banks say that electronic loan portal for small business relief program is to blame for delays - CNBC


Banks say that electronic loan portal for small business relief program is to blame for delays - CNBC

Posted: 29 Apr 2020 10:55 AM PDT

Secretary of the Treasury Steven Mnuchin speaks with President Donald J. Trump and members of the coronavirus task force during a briefing in response to the COVID-19 coronavirus pandemic on Thursday, April 02, 2020 in Washington, DC. (Photo by Jabin Botsford/The Washington Post via Getty Images)

The Washington Post

Under pressure to deliver relief to hundreds of thousands of small businesses, banks of all sizes are complaining that the federal government's loan-entry portal is behind delays in the program.

Nine industry groups representing the nation's banks and credit unions sent a letter late Tuesday to the Small Business Administration and Treasury Secretary Steven Mnuchin voicing concerns over how long it is taking to submit loans via the SBA loan portal known as E-Tran.

"With the start of the second round of funding many lenders are having significant problems submitting loan applications into the SBA's system, preventing them from delivering this critical financial assistance to small businesses that desperately need it," the groups say in the letter.

They added that "if the pace and performance of the E-Tran system cannot be improved, then we ask that you share that information with the public to help manage expectations for all of the small businesses still counting on PPP for a lifeline."

The Treasury and Small Business Administration announced on Wednesday that they will be temporarily shutting out large lenders, any firm with over $1 billion in assets, from submitting PPP applications for an eight-hour time period in order "to ensure access to the PPP loan program for the smallest lenders," according to an email sent to lenders.

The "reserved processing time" will start at 4:00 PM ET on Wednesday and end at 11:59 PM ET. SBA and Treasury say they will evaluate whether to create a similar reserved time in the future.

The Paycheck Protection Program, a major component of the administrations' response to the coronavirus pandemic, is in its second round after its initial $350 billion funding was quickly depleted. The SBA's E-Tran system, which is the online portal lenders enter application information into to obtain a loan number prior to disbursing funds to the borrower, has been plagued with issues in both rounds of funding.

When the program re-launched Monday at 10:30 a.m. after Congress approved an additional $320 million in funding for PPP, it only took four minutes before users began receiving error messages and reporting they had been shut out of the system.

A spokesman for the SBA said in an email to CNBC that "the PPP program is working" and that the agency "is providing real-time data updates, proactively identifying and resolving issues."

Bank of America said Tuesday that it only got 1,000 applications processed and approved by the SBA out of the 184,000 total the lender had submitted on Monday, a spokesperson said in an email to CNBC. Bank of America also noted that it had an additional 48,000 applications ready to submit to the SBA.

Wells Fargo said that it had submitted more than 100,000 applications to the SBA on Monday, according to an internal email sent by the head of Wells Fargo's small business, Steve Troutner, on Tuesday. However, the bank said that it only received responses at the rate of about 80 per hour, which is well below the 350 loans per hour restriction.

That application limit rule was announced on Sunday evening by the SBA and has led to "very slow processing times for all participating lenders," Troutner said in the email.

In the letter to the SBA and Treasury, the nine industry groups have also requested transparency from the government agency in order "to help us explain to our members what is causing the problem and how it will be resolved."

"We understand resources are limited and SBA and Treasury are fielding many questions from a great number of lenders, potential borrowers, and others," the letter states, "however we have found the lack of transparency and timely guidance on the PPP process impedes the funding of loans to small businesses in need."

With reporting by Kate Rogers

City's small business bailout snubbed outer boroughs - Crain's New York Business

Posted: 29 Apr 2020 02:14 PM PDT

City Council members blasted the de Blasio administration's distribution of local Covid-19 small business aid after officials said just 1% of loans for small businesses have gone to the Bronx.

Councilman Mark Gjonaj, whose district is in the borough, called New York a "city of two tales" after Small Business Services Commissioner Gregg Bishop disclosed that Manhattan businesses landed about two-thirds of loans from the city. Funds—up to $75,000 for small business with 4 employees or less—are part of the $20 million Small Business Continuity Loan program launched at the start of the pandemic.

The city has received about 8,000 applications and distributed roughly $10 million, Bishop said. Based on an average of $60,000 per loan, the city would need more than $1 billion to cover all applicants.

"The need far outweighs our ability to help on the local level," Bishop said.

Of the loans the city has distributed, about 5% of loans have gone to Staten Island businesses, 9% to Queens and 18% to Brooklyn.

"We know that many of our small businesses are in the outer-boroughs yet we are seeing a huge disparity," Gjonaj said.

Bishop countered that the majority of the businesses who qualify for the loans are in Manhattan. The borough is home to 40% of such firms, 25% are in Brooklyn, 23% in Queens, 8% in the Bronx and 4% in Staten Island.

"What you are seeing is a ratio that matches the general landscape of small businesses in the city," Bishop said.

A separate grant program has provided $19 million to roughly 2,600 small businesses during the pandemic has a similar breakdown. Half of the money went to Manhattan firms, 25% to Brooklyn businesses, 3% to the Bronx, 3% to Staten Island and 16% to Queens.

The SBS has stopped taking applications on its loans and shifted focus to helping businesses navigate the process for federal loans, such as the Payroll Protection Program. Those loans are less restrictive and can help a wider range of businesses, Bishop said.

Councilman Justin Brannan of Brooklyn questioned why the city couldn't commit more to help small businesses. Bishop echoed the mayor's prior comments that the city is facing a budget crunch will need federal help.

"We are hearing a lot of talk now about donor states, those that send more to D.C. than we get back," Brannan said. "A lot of small businesses are starting to feel the same way. That they send more money to the city than they are being offered to access now when they need it most."

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