U.S. small-business rescue loan program enters fourth day plagued by technical problems

U.S. small-business rescue loan program enters fourth day plagued by technical problems

By Pete Schroeder and Michelle Price

WASHINGTON (Reuters) – The U.S. government’s $349 billion small-business rescue program entered its fourth day on Monday, plagued by ongoing technology and processing problems that are delaying disbursements to businesses hurt by the novel coronavirus, according to industry groups, bankers and an email seen by Reuters.

U.S. lenders, inundated by thousands of loan applications, struggled to access the government’s technology system for processing the paperwork over the weekend, while that paperwork also changed more than once, the sources said.

“We know that your efforts have been frustrated with system issues, policy questions and slower than usual responses,” the Small Business Administration’s Regional Offices wrote to bankers on Saturday evening, according to an email seen by Reuters. “We are working to improve all of those issues,” it added.

Many lenders have had problems signing up for new user accounts with the SBA’s platform, and with unlocking or resetting passwords for existing user accounts, the email said, adding the SBA was working to unlock all of the existing user accounts in one batch.

In that email, SBA also alerted lenders that its technology platform had been generating a loan authorization form that was “not at all” compliant with the terms of the rescue program.

“Please do not close any loans using the current version of the loan authorization!” it said.

Congress last month created the unprecedented program as part of a $2 trillion stimulus package to help businesses that have either shut down or have been dramatically curtailed by the coronavirus pandemic. Borrowers could apply for the loans via participating banks from Friday until June 30.

Over the weekend, the Independent Community Bankers of America (ICBA), which represents thousands of small banks, complained to the Treasury and SBA about banker frustration with “failed technology” and “massive delays” its members were experiencing with the SBA platform, which was not designed to process the massive program.

Community bankers also took to social media to complain about the form changes and being locked out of the system.

“Has the administration lost their mind? Going well?! Hell nearly every community bank in the nation is locked out of the … SBA platform!” Noah W. Wilcox, chief executive and chairman of Grand Rapids State Bank, who is also chair of ICBA, tweeted on Sunday.

A senior Trump administration official said on Monday, “Treasury, working closely with SBA, launched an unprecedented $350 billion Main Street assistance program in just one week. This is a historic achievement in an incredibly short amount of time.

“As of today – Day 4 – we’ve surpassed $35 billion originated; more than 100,000 small businesses have successfully applied and more than 2,000 lending institutions are up and running. With all of that success, starting today, the SBA is offering a lender hotline and our 68 district offices across the country will be available to assist lenders,” the official said.

Speaking to CNBC on Monday, Rob Nichols, CEO of the American Bankers Association, said banks had done “a considerable amount of work” over the weekend working closely with the SBA and Treasury and were making good progress.

Latest Category Posts