As the Small Business Administration’s Paycheck Protection Program launched for the second time on Monday with $310 billion in fresh funding, complaints of processing delays and computer glitches began to surface almost immediately as the program was overwhelmed by a flood of demand yet again.
KEY FACTS
The program has been surrounded by controversy after a chaotic first launch on April 3, followed by the revelation that scores of public companies had received multimillion-dollar loans while smaller mom-and-pop shops were shut out completely when the original $350 billion allocated to the PPP ran out last week.
The new round of funding—approved by Congress and signed into law by President Trump last week—has several provisions baked in to combat previous issues, including new guidance regarding public companies’ eligibility and $60 billion reserved especially for smaller community lenders.
Over the weekend, the SBA issued more new guidance for lenders intended to help applications flow more smoothly, including capping the total amount any bank can lend under the program at $60 billion and “pacing” the flow of applications through E-Tran— the computer system that the SBA uses to process loan applications from banks.
Almost immediately after the program relaunched on Monday morning, however, reports began surfacing that E-Tran was repeatedly crashing and overloading the same way it did during the first days of the program.
The crux of the issue is volume: in an emailed statement on Monday afternoon, the SBA said that “currently, there are double the number of users accessing the system compared to any day during the initial round of PPP.”
The SBA also noted that it is “actively working to ensure system security and integrity while loan processing continues.”
Community bankers across the country took to Twitter to voice their frustrations; as of 4:00 p.m. ET, the system was still experiencing problems.
BIG NUMBERS
More than 200 public companies received PPP loans worth more than $750 million, according to the New York Times; the Times also reports that firms that had recently boasted about other sources of money and firms that had been under fire from regulators were part of that group. The Small Business Association says it approved more than 1.6 million loans during the first phase of the PPP. On Monday alone, the SBA said it processed more than 100,000 PPP loans by more than 4,000 lenders.
CRUCIAL QUOTE
Robert Fisher, president and CEO of Tioga State Bank in Spencer, N.Y., estimates that his bank has only been able to get eight or nine applications submitted and approved by the SBA out of a pool of about 90 because of glitches and error messages in E-Tran. “It's probably actually more frustrating today than it was on April 3rd,” Fisher says. “I just find it amazing that community bankers are out there trying to help our communities, we're trying to help Main Street America and yet we're having difficulty getting access to the system that will help our customers and our communities.”
KEY BACKGROUND
Under the Paycheck Protection Program, companies and nonprofits with fewer than 500 workers can apply for loans of up to $10 million at 1% interest so they can cover two months of payroll and overhead expenses. If the borrower retains workers and doesn’t cut their wages, the government will forgive most or all of the loan and repay the bank lenders. Lawmakers scrambled to pass supplemental economic rescue legislation after the program, one of the cornerstones of the $2 trillion CARES Act, exhausted its $350 billion in funding after less than two weeks. After days of tense negotiations, congressional leaders agreed on new legislation to set aside another $310 billion for the PPP, with $60 billion of that money reserved for community lenders and smaller businesses without existing banking relationships.
WHAT TO WATCH FOR
Despite the new pot of cash, experts from the Consumer Bankers Association are already warning that demand is likely to deplete the program again in about four days, CNBC reports. According to the Association, it will take $1 trillion to fully meet the demand for loans from small businesses.
This article originally appeared on Forbes.
