U.S. banks on Monday began another chaotic dash to grab $310 billion in fresh small business aid released by the government, after it changed some of the rules of the first-come-first-served program at the 11th hour.
FILE PHOTO - U.S. Speaker of the House Nancy Pelosi signs H.R. 266, the Paycheck Protection Program Healthcare Enhancement Act, an additional economic stimulus package that passed earlier in the week by the U.S. Senate, during a signing ceremony on Capitol Hill as the coronavirus disease pandemic continues, in Washington, U.S., April 23, 2020. REUTERS/Tom Brenner
“So ETRAN lasted a whole 2 minutes before crashing. ... It’s going to be a long 48 hours,” tweeted Alec Downing with First Farmers Bank & Trust in Indiana. Bank of America, for example, reported receiving 279,000 applications in the first five days of the program launching, of which it processed at most 15%, based on a Reuters analysis of SBA disclosures. JP Morgan, the top lender in the first round, said it had 300,000 loans “in some stage of the application process” of which it had processed 10% by the time the first round of funds ran out.
Created as part of a $2.3 trillion congressional economic relief package, the program kicked off on April 3 with an initial $349 billion in funding which was quickly exhausted in less than two weeks. The program allows small businesses hurt by the coronavirus to apply for government-guaranteed loans with participating banks. Those loans will be forgiven if they are used to cover payroll costs, subject to some conditions.
On Sunday, the SBA said it would try to mitigate that problem by announcing that banks could submit a minimum of 15,000 applications in a one-off bulk file, leaving smaller lenders to battle with the clunky E-Tran system.
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