One day after the launch of a $350 billion loan program designed to rescue millions of small businesses pummeled by the coronavirus pandemic, technical glitches continued to cripple the ability of the nation's top lenders to begin processing the loans, throwing into doubt when any of the applicants will start receiving any money.
The lending program, which forms part of the $2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act, is a much-needed lifeline for the 30 million small businesses across the country. It offers loans of up to $10 million to companies who employ fewer than 500 people. Those loans are forgiven as long as the businesses meet certain conditions, such as using the majority of the funds to pay worker salaries for the eight weeks following the loan closing.
However, two of the nation's biggest banks say they have only just been able to start processing loans.
“We are all waiting on the Small Business Administration,” a Chase senior executive told NBC News.
Bank of America and JPMorgan Chase received tens of thousands of applicants within hours of the program's launch on Friday, senior executives at both companies told NBC News. Bank of America reported receiving over $22 billion in requested funds. Wells Fargo, which appeared to have a late start, on Saturday opened a portalwhere customers could register and get an email back “with next steps within in a few days.” Citi’s website said “applications will be available shortly.”
To begin the lending process, small businesses must submit their application via an online portal on their bank's website. A banker then conducts a phone call with the applicant.
However, there's no way in the hastily fashioned system for the banks' computers and those of the Small Business Administration, which administers the Paycheck Protection Program loans, to talk to one another. Bankers have resorted to entering applicant information by hand into E-Tran, the proprietary system used by the SBA to guarantee loans and generate loan numbers.
With banks reporting tens of thousands of applications just in the first day, the system is already overwhelmed. The SBA usually processes about 60,000 loans in an entire year.
Despite this, President Donald Trump said in a news briefing Saturday that, "in 24 hours, the SBA processed over 28,000 loans."
"Remember, we had the greatest economy," Trump said. "Now we have to open our country."
Senior banking executives at Bank of America and Chase told NBC News they were still waiting on loan numbers to come back from the SBA, and so far had not processed any more than a trickle from the flood of applicants.
Bankers said they were working systems to automate and speed up the process but had no idea when these customers would start to see money in their accounts.
An email from the Small Business Administration to lenders Saturday morning apologized for "ongoing technical issues," which included slowness and the inability of "many" lenders to create new logins or reset passwords.
The SBA did not immediately respond to an NBC News request for comment.
Some community banks, locally owned retail banks with less than $1 billion in assets, reported being able to make loans. Connect One Bank of New Jersey told CNBC Friday that they had processed a loan and deposited it into a customer's account.
“@BankofAmerica & community banks are rocking!” Trump tweeted late Saturday morning, adding that he would take additional steps if necessary to shore up the program.
“I will immediately ask Congress for more money to support small businesses under the #PPPloan if the allocated money runs out. So far, way ahead of schedule. @BankofAmerica & community banks are rocking!"
Since the program is first come, first served, small businesses who applied at lenders who were having trouble with the hastily fashioned relief program run the risk of missing out.
Small businesses, which employ almost half the private workforce, don't have the cash runways of big companies such as Amazon or Starbucks to help them weather a crisis of this magnitude. In a recent study, half the small businesses surveyed had two weeks or less of cash liquidity.
"After the financial crisis, we lost 1.8 million small business owners," Karen Harned, executive director of the National Federation of Independent Business, told NBC News. "After the reaction I'm hearing, I'm worried about what that number might be after this is over."