The rescue is under intense scrutiny after several large companies with access to financial markets were able to secure tens of millions of dollars from big banks in the first wave.
The SBA’s „E-Tran“ system was prone to crashes and overloading during that first round of the program, and the agency made a rare public admission Monday that it was slowing down again because of unprecedented demand. The SBA announced it was „pacing“ applications as it tried to manage the deluge. The agency began to impose new restrictions on the volume of loans banks can submit, a change that it only conveyed to banks on Sunday — fueling confusion that has dogged the effort ever since its hurried April 3 launch.
„It’s like running to grab your toys on Christmas morning and Santa Claus closed the bag,“ said Cynthia Blankenship, vice chairman and corporate president of Bank of the West in Grapevine, Texas. „Sad.“
The chaos, which many involved in the effort expected after the program’s rocky initial rollout, compounded concerns among ailing businesses about whether they would be able to receive aid.
„Our member banks across the country are deeply frustrated at their inability to access @SBAGov’s E-Tran system,“ American Bankers Association CEO Rob Nichols said on Twitter Monday afternoon. „We have raised these issues at the highest levels. Until they are resolved, #AmericasBanks will not be able help more struggling small businesses.“
As it faced a barrage of new loan applications, the SBA on Monday tried to throttle the amount of incoming loan volume coming from any one lender.
On Sunday, hours before the program was set to launch, the agency told lenders it would be pacing applications and would cap at $60 billion the amount that a single bank could submit. It told lenders they could submit applications in bulk, first setting a 15,000 loan minimum on Sunday and then lowering it to 5,000 by Monday afternoon.
The agency decreased the threshold after Sen. Sherrod Brown (D-Ohio) told the Trump administration in a letter that the 15,000-loan minimum „appears to favor large lenders over smaller financial institutions.“
In addition, the SBA told some banking industry representatives that it planned to limit incoming applications to 350 loans per bank per hour, according to sources familiar with the matter, though some lenders were in the dark Monday morning. An agency spokesperson discouraged POLITICO from using the number but declined to clarify further.
„SBA notified lenders yesterday that pacing of applications into the ETran system would occur, meaning all lenders would be able to submit at the same rate per hour,“ said SBA spokesperson Jim Billimoria said. „The pacing mechanism prevents any one lender from submitting thousands of loans an hour into the ETran system. If a lender goes above the pacing limit they will get timed out.“
Source: politico.com
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