Small businesses must apply for the money through banks, but the SBA guarantees those loans and must approve each application. Shortly after the new round of money became available at 10:30 a.m., bankers around the country began reporting problems accessing the SBA’s Web portal, known as E-Tran, and expressed fury on social media over the faltering computer systems.
“Trying to do hundreds of PPP loans and Etran immediately crashed! So frustrating not to have access funding for so many small businesses!” tweeted Cynthia Blankenship, corporate president of Bank of the West, a small community lender in Texas.
Rob Nichols, president of the American Bankers Association, wrote on Twitter that bankers were “deeply frustrated” and that “we have raised these issues at the highest levels.”
“All of the reports I have around the country is that it’s been a disaster,” said Paul Merski of the Independent Community Bankers of America. “Bankers have been locked out most of the day. It’s been frustrating.”
Adding to the urgency is the design of the program, which is supposed to dole out loans on a first-come, first-served basis. Hundreds of thousands of small businesses were left out of the first round of funding of $349 billion, which ran out in 13 days earlier this month. Some analysts said the new round of funding may go even more quickly.
“In the time since the previous round of funding ran out, businesses and banks have used this time to prep and perfect applications,” said Juleanna Glover, a D.C.-based corporate public affairs adviser tracking the program.
“Once the application portal reopens, there will be an immediate flood of tens of thousands of applicants. Maybe millions. I’d be surprised if this next tranche lasts even 72 hours,” Glover said.
The SBA acknowledged some problems with its systems but said that by 3:30 p.m. it had processed 100,000 loans submitted by 4,000 lenders. It did not say how much of the $310 billion had been allocated through those loans.
Twice as many people attempted to access the program Monday as during any period in the initial phase of funding, SBA Administrator Jovita Carranza said on Twitter. “The @SBAgov is actively working to ensure system security and integrity while loan processing continues,” she said.
But the SBA, and the Trump administration, have come under criticism for doling out aid to bigger, publicly traded companies, while excluding smaller ones. The agency has also refused to reveal who got the government-backed loans.
During an afternoon news conference, President Trump said he’d like officials to make public the companies that receive these loans.
The Los Angeles Lakers on Monday became the latest to say that it had applied and received money under the first round of funding. The NBA franchise pledged to return it, something several other companies and organizations have done after their participation was revealed. It was unclear if any other professional sports franchises received these loans. The NBA left the decision to apply for an SBA loan to its individual teams, according to people with knowledge of the situation who were not authorized to speak publicly.
Last week, AutoNation, a Fortune 500 company, acknowledged that it had received nearly $80 million in SBA loans for its various dealerships. More than 81 locations received funding, according to documents reviewed by The Washington Post.
Other big companies that received funding include more than 40 hotels, such as Ritz Carlton Atlanta and numerous Marriott and Hilton properties.
At least $500 million went to large publicly held companies, according to a Post analysis of Securities and Exchange Commission records.
Numerous publicly traded companies have promised to return the funds since the SBA’s clarification, including AutoNation, the Potbelly sandwich company and the financial firm Manning & Napier. Others say they will keep the money.
The program’s rules were initially written in such a loose way that many companies qualified for the benefits, not just those traditionally considered to be “small” businesses. After the initial round of funding ran out April 16, Treasury said it was tightening the rules to make it much harder for publicly traded companies or firms with access to outside money to participate.
The Post requested data on the program, including the names of companies that received loans, under the Freedom of Information Act, but the SBA closed the request without providing the data. However, some companies have voluntarily revealed their participation or had to publish their loans as part of SEC filings.
In the face of mounting criticism, the Treasury Department and the SBA emphasized the program’s potential to create and preserve jobs. They estimate that more than 1.66 million small businesses were helped by the program’s first round of funding, supporting more than 30 million jobs.
“The Trump Administration is fully committed to ensuring that America’s workers and small businesses continue to get the resources they need to get through this challenging time,” the two agencies said in a joint statement Friday.
It couldn’t immediately be learned, though, how many of the companies that received funding rehired workers, as the law had intended.
More than 26 million Americans have filed unemployment claims since the pandemic arrived on American shores. The SBA initiative, known as the Paycheck Protection Program, is among the most critical that Congress has approved to shore up the U.S. economy, which is crashing as millions of businesses, small and large, close to prevent the spread of the coronavirus.
To gain access to the second round of funding, lenders said they had thousands of applications cued up, and some developed technology to make it easier to file loan applications in the SBA’s computer systems. JPMorgan Chase and Bank of America, two of the country’s largest banks, said they had tens of thousands of applications prepared. JPMorgan was the top lender during the first round of loans under the Paycheck Protection Program, distributing $14 billion.
But the program’s electronic infrastructure has consistently struggled to handle the barrage of loan applications, in some cases making it hard for small businesses and their banks to get loans approved.
TAB Bank in Utah more than doubled the 10 employees dedicated to manually submitting applications into the SBA computer system, E-Tran, for the second round of funding. The first time, the bank completed fewer than 90 loans before the money ran out, but this time it had 1,200 applications ready and 800 more being processed.
But by early Monday afternoon, TAB Bank’s army of employees had succeeded in pushing just five applications through the system. The system repeatedly crashed, stalled and kicked out employees attempting to submit applications, said Curt Queyrouze, the bank’s chief executive.
“I have been sitting here, watching my screen, refreshing for three hours,” Queyrouze said, adding that he had been working on a single application for a small business with just three employees all morning. “The entire time we’ve been talking, it’s said ‘loading.’”
Some bank employees may be asked to rest for a while and then stay up all night submitting applications, Queyrouze said. “It sounds crazy, pulling all-nighters, but we’re going to fight for these small businesses,” he said. “I don’t know when the money is going to run out, and we’re going to give it our all.”
“The frustration level is extremely high today,” said Queyrouze. “We knew there would be issues with the volume,” but it was
worse than expected, he said.
An hour before the fund was scheduled to relaunch, Texas-based Bank of the West noticed that the SBA portal was open and began uploading applications, said Blankenship, the bank’s corporate president. Over the next hour, it successfully submitted about 15 loans, she said.
But minutes after the official 10:30 a.m. launch, when thousands of other banks probably started to join the fray, the system crashed, said Blankenship. Employees repeatedly received error messages and spent most of the day in limbo, waiting for the system to begin operating normally again, she said.
“I don’t know if I need to ask my guys to work midnight to 4 a.m. Everyone is already exhausted,” she said. “Our guys have been working 16 hours a day.”
SBA press director Carol Wilkerson said the agency had warned small businesses that system problems could occur.
“SBA notified lenders yesterday that pacing of applications into the E-Tran system would occur, meaning all lenders would be able to submit at the same rate per hour,” Wilkerson said. “The pacing mechanism prevents any one lender from submitting thousands of loans an hour into the E-Tran system. If a lender goes above the pacing limit, they will get timed out.”
The program empowers banks to offer federally subsidized loans at terms unavailable on the private market. Borrowers get an interest rate of just 1 percent and can have the loan entirely forgiven if they keep paying employees through the crisis. Small businesses are allowed to self-certify that they qualify for the funds, allowing lenders to bypass much of the paperwork usually required for loan approvals.
Concerns remain that too much of the funding went to industry insiders or businesses that should have found money elsewhere. Some lenders limited their lending activities to businesses with which they had existing relationships, raising concerns that too much of the funding went to those who had an inside track.
Nearly 80 percent of the small businesses that applied for a loan were still waiting for an answer when the first round of funding ran out, according to a survey by the National Federation of Independent Business.
The Main Street Alliance, an advocacy group representing small businesses, argues that there are still serious problems with the program.
“The dangerous inequities we saw with the first round will not be resolved” in the second round of funding, said the group’s executive director, Amanda Ballantyne. “With funding likely to run out in 48 hours, it is ludicrous that Congress thinks it has already done its job supporting small businesses.”
Congress also carved out $60 billion of the $310 billion in the second round of funding for small community banks in hopes of reaching more mom-and-pop companies without connections to the country’s biggest lenders. But some small bankers complained Monday that the SBA had allowed lenders to submit applications in batches of 5,000. That’s more than most small institutions can process at once, giving large banks another advantage, they say.
“Community lenders aren’t going to be even submitting 5,000 loans at a time,” said Merski of the Independent Community Bankers of America. “It’s not first-come, first-served. It’s an exercise of randomness for who gets a loan or not. It is just a frustrating process.”
New Jersey-based First Bank was prepared to submit 350 loan applications seeking $45 million when the program relaunched Monday morning. By late afternoon it had secured less than two dozen, said Patrick Ryan, the bank’s chief executive.
“We’re trying to help our customers, and they’re extremely nervous,” Ryan said. “If there is a silver lining, if no one can get into the system you can’t run out of money.”
Jonathan O’Connell, Steven Rich and Erica Werner contributed to this report.