Outages and delays hamper new small business loan program
The electronic system used by the Small Business Administration to set up new coronavirus loans was down much of Monday, according to senior banking executives, making it impossible to guarantee many new loans.
Billions of dollars in loans sought by small businesses trying to pay employees and keep their doors open were on hiatus as the Treasury-backed SBA grapples with demand on its system.
There are approximately 30 million small businesses in America. Many are expected to apply for the program, which offers up to $ 10 million in loans that can turn into free grants if companies follow certain rules, including using the money primarily for payroll.
“E-tran”, the SBA’s proprietary loan guarantee system, suffers from technical errors, access problems and extreme slowness since the launch of the $ 349 billion small business rescue effort authorized by Congress, frustrating small business owners looking for a lifeline.
When the system is working, banks say they encounter major technical problems and access barriers. Existing accounts had to be re-authorized and new ones created.
“Unfortunately, our district office staff have absolutely no way of creating user accounts, unlocking user accounts, or resetting passwords,” one SBA regional office said in a statement. email to lenders reviewed by NBC News.
This means that if a bank only had two IDs, then only two people could enter data into E-tran.
“We asked SBA for more information on who they use and what their plan is to improve access to E-Tran,” tweeted Senator Marco Rubio (R-FL), chairman of the Small businesses and entrepreneurship committee. “This MUST be corrected as soon as possible. “
In some cases, E-tran requests information that is not required in Payment Protection Plan requests or excludes certain applicants who should be authorized.
In a statement, the SBA expressed confidence in the operation and effectiveness of the program.
“The system is operational. We continue to process, approve and guarantee billions of dollars in loans per hour,” Jennifer Kelly, spokesperson for the SBA, said in a statement.
The SBA said it approved $ 38 billion in payment protection loans. And some banks, especially small community banks, have successfully executed some loans. But that doesn’t mean there was $ 38 billion deposited into customer accounts.
Big banks, adhering to more stringent regulations enacted after the 2008 financial crisis, are waiting for the latest technical guidelines from the SBA to begin distributions.
“This is an emergency, and when you do things in an emergency, it will be a lot less than perfect,” Rubio told CNBC. “What we want to see is that the number of lenders in the system is increasing every day and the number of issues and problems with the program is decreasing every day. So it will be better, ”he added. “It must be better.”
A backup system designed by Amazon Web Services to help relieve some of the pressure is not yet operational.
Amazon did not immediately respond to a request for comment from NBC News.