Small banks worry they’re at a disadvantage in new round of SBA loans
Share Now on:
The Small Business Administration started accepting applications Monday for the second round of federal emergency loans under the Payroll Protection Program. The first round of loans was worth nearly $350 billion, whereas this one will distribute $320 billion.
The system still isn’t working too well — especially for smaller banks.
About 15 minutes after the SBA’s application window opened Monday morning, Bay State Savings Bank in Worcester, Massachusetts, had 100 applications ready to go.
Bank President Peter Alden said compared to the first round of PPP loans, banks have much clearer guidance from the SBA.
“They’re better prepared, as we are better prepared,” Alden said. “Hopefully, the system will hold up with the volume that’s going to happen.”
But the system didn’t hold up. Small banks across the country reported technical problems submitting loans to the SBA. At La Salle State Bank in Illinois, senior loan officer Chris Duncan said he got error messages all morning.
“At the bottom of every screen, you have to hit ‘save and next,’ [and] when you would do that, the system would time out, or you’d get the spinning wheel of death and get booted out eventually,” Duncan said.
Because his bank was only submitting 25 applications, Duncan said he and his colleagues had to enter all of the borrower information manually for each loan — names, Social Security numbers, employer ID numbers, a bunch of yes-or-no checkboxes.
He said the process is supposed to take 10 minutes per application, but each took about an hour.
Meanwhile, banks that were submitting 5,000 or more applications could submit all of the information at once with a single document.
The Bank of Southern California in San Diego is only planning to submit 1,200 applications. Bank President Nathan Rogge said he’s frustrated with the process.
“I do think those mass uploads that came from the largest institutions are really bogging down the system,” Rogge said.
At Thayer County Bank in Hebron, Nebraska, President Patrick Kenner said this is giving bigger banks an unfair advantage.
“It’s just real frustrating, to be sitting here [with] everything ready to go and then we’re just spinning our wheels,” Kenner said.
JPMorgan Chase and Wells Fargo declined to comment for this story. The Small Business Administration hadn’t replied to a request by deadline.
Correction (April 27, 2020): An earlier audio version of this story misstated the name of Thayer County Bank.
COVID-19 Economy FAQs
New COVID-19 cases and deaths in the U.S. are on the rise. How are Americans reacting?
Johns Hopkins University reports the seven-day average of new cases hit 68,767 on Sunday — a record — eclipsing the previous record hit in late July during the second, summer wave of infection. A funny thing is happening with consumers though: Even as COVID-19 cases rise, Americans don’t appear to be shying away from stepping indoors to shop or eat or exercise. Morning Consult asked consumers how comfortable they feel going out to eat, to the shopping mall or on a vacation. And their willingness has been rising. Surveys find consumers’ attitudes vary by age and income, and by political affiliation, said Chris Jackson, who heads up polling at Ipsos.
How many people are flying? Has traveled picked up?
Flying is starting to recover to levels the airline industry hasn’t seen in months. The Transportation Security Administration announced on Oct. 19 that it’s screened more than 1 million passengers on a single day — its highest number since March 17. The TSA also screened more than 6 million passengers last week, its highest weekly volume since the start of the COVID-19 pandemic. While travel is improving, the TSA announcement comes amid warnings that the U.S. is in the third wave of the coronavirus. There are now more than 8 million cases in the country, with more than 219,000 deaths.
How are Americans feeling about their finances?
Nearly half of all Americans would have trouble paying for an unexpected $250 bill and a third of Americans have less income than before the pandemic, according to the latest results of our Marketplace-Edison Poll. Also, 6 in 10 Americans think that race has at least some impact on an individual’s long-term financial situation, but Black respondents are much more likely to think that race has a big impact on a person’s long-term financial situation than white or Hispanic/Latinx respondents.
Find the rest of the poll results here, which cover how Americans have been faring financially about six months into the pandemic, race and equity within the workplace and some of the key issues Trump and Biden supporters are concerned about.
As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.
Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.
Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.