Within minutes of relaunching the program on Monday, people were sending screenshots of errors received by lenders trying to download apps.
“It looks like the pace is slower than last time around,” an industry source said.
Monday’s pain was acute because the grim realities of the first-come, first-served program are sinking. Not all businesses that need a loan are going to get one.
“I don’t know what you are doing,” said another industry source who works with business owners. “The demand is skyrocketing. We realize that there are not enough loans for everyone.”
Capitol Hill lawmakers and advisers have said the problems are the price to pay for moving fast, as businesses desperately need them.
“I never expected the Los Angeles Lakers, who I’m a huge fan of the team, but I’m not a huge fan of the fact that they took out a $ 4.6 million loan. I think it’s outrageous and I’m glad they returned it or were responsible for it, “Mnuchin said during an appearance on CNBC.
He said the Small Business Administration would start reviewing all loans over $ 2 million before they were canceled. “We will therefore ensure that the intention of the taxpayers is respected here,” he said.
He went on to describe this review as a “full audit of every loan over $ 2 million”, noting that “the certification was very clear in saying that if people had other sources of cash they could not take that out. ready”.
“I think it was inappropriate for most of these companies to take out loans. It was clear that there was certification,” he said, noting that the Treasury was “encouraged” by companies that have repaid these loans.
The SBA said Monday afternoon that it had successfully processed more than 100,000 loans from more than 4,000 lenders.
But small banks nonetheless said they were struggling to get many apps.
A source representing community banks said he heard from bankers across the country who had spent weeks preparing their cases for the stimulus before they were initially blocked.
Several industry sources rebuffed the idea that the stimulus mechanism was the only reason the system was unreliable. Instead, arguing the problem was that the SBA’s system was simply not equipped to handle volume despite multiple promises made to Congress and the industry that the system would be up and running this time around.
However, the scale and speed of distribution is an issue. The SBA has never, in the agency’s history, loaned the kind of money it is responsible for putting out right now. It would normally take years for the SBA to lend the more than $ 660 billion it currently gives.
Last minute changes to the program
Sources also pointed out that once again problems with the process on Monday stemmed in part from a lack of clarity from the Treasury and the SBA on what the stimulus would look like.
It wasn’t until Sunday afternoon that lenders learned that the system would be clocked in hourly. On Sunday, they also learned that the SBA would allow bankers with 15,000 or more requests to submit them en masse. Even after the directive was announced, the SBA updated it again on Monday to say it was lowering the limit for mass applications to 5,000.
Banks were then forced to decide whether it would be faster to try to download apps on their own or to pass them to the SBA for bulk processing. Sources said few banks ended up submitting their requests en masse for fear it could take the SBA weeks to process, leaving their customers in the queue after the money runs out.
Community bankers argued that mass demand options put them at a disadvantage. Congress assistants and those participating in the program have gone to great lengths throughout the process to gain clarity on who is eligible for loans and the responsibilities of banks when it comes to knowing your client’s requirements.
It was only when many leading, and in some cases publicly traded, companies admitted to receiving the emergency loans that the Treasury stepped in to remind companies that they should only apply if they did. desperately needed.
What to watch next
President Donald Trump speaks in the rose garden – The president is due to speak to the program, joined by small business owners, at 3 p.m. ET on Tuesday. There is no doubt that the President has seen some of the frustrations with the program, but so far there has been no major change in how it works or in who is eligible.
Will bankers be able to upload applications faster on Tuesday? – Slowdowns could mean it will take longer than expected for the money to run out. But, if the first round was any indication, the slowdowns in the bid process were resolved over the week.
“Now that Chief McConnell has decided that the Senate will meet again next week, he should ask his committee chairs to immediately begin vigorous and desperately needed oversight of the Trump administration’s response to the Covid pandemic. 19 and its implementation of the CARES Act, “Schumer wrote. . “There must be public hearings in the Senate, at a minimum, to examine why the United States still does not have adequate testing and why some lenders in the SBA’s Paycheck Protection Program have prioritized their clients’ claims. larger and richer at the expense of small businesses. who have often suffered greater difficulties. “
CNN’s Betsy Klein contributed to this report.