Trump praises SBA’s ‘incredible’ loan program as big banks feel distressed
“What we’re seeing is all or nothing in the batch system,” Consumer Bankers Association president and CEO Richard Hunt said in an interview.
The SBA did not respond to requests for comment.
Some of the banks left in the dark were starting to try to enter requests manually, which turned out to be its own challenge for lenders of all sizes.
The SBA’s systems suffered problems and crashes throughout the existence of the program, which imposed an unprecedented level of loan requests on the agency. The SBA said this week it is “regulating” incoming loan applications as it tries to manage the load. He told lenders he was capping loan origination at $ 60 billion per bank and would limit incoming loans to 350 per bank per hour – a limit that banks say is virtually unachievable amid the downturn in the system. of the SBA.
On Tuesday, the SBA told banks it could no longer use automated robots to enter loan applications, in another mitigation effort to take the strain off its systems.
The uncertainty has arisen from the fact that many of the same large banks are facing close scrutiny from Washington as to whether they prioritized large customers over small businesses in the first wave of applications of the. paycheck protection program.
Treasury Secretary Steven Mnuchin said on Tuesday that any loan over $ 2 million would be subject to further scrutiny before being canceled. He said borrowers would face criminal liability if they misrepresent their financial needs. The administration is discouraging large publicly traded companies from raising money after loan approvals for Shake Shake, Ruth’s Hospitality Group and other large companies sparked a public outcry.
Congress tried to address concerns about inequalities in the program by setting aside $ 60 billion in loans for small lenders to distribute. On Tuesday, the SBA said those lenders – banks with less than $ 50 billion in assets – had about $ 39.6 billion in loans approved in the last round of PPP funding, or about 75% of the total amount. loans approved so far.
Representatives of the bank said they were ignoring the SBA thinking behind the system for major lenders. Regardless of intention, a source at a bank who declined to be identified said it appeared to put big lenders at the back of the pack.
“This is clearly what happened,” the person said. “They’re in the hundreds of loans processed, which is crazy because they have tens of thousands of loans.”