You are here

SBA temporarily gives smaller lenders exclusive access to loans

Published April 29, 2020
Large companies receiving small business loans leads to more oversight.

WASHINGTON (BRAIN) — The Small Business Administration and Department of the Treasury will make it easier for small businesses to obtain Paycheck Protection Program loans.

Beginning Wednesday at 4 p.m. EDT until 11:59 p.m. EDT, the SBA will accept applications only from lenders with asset sizes less than $1 billion. The SBA made the announcement via email Wednesday at 2:24 p.m. This comes less than 24 hours after the SBA said Tuesday night that all PPP loans in excess of $2 million will be scrutinized after several large companies have been securing them.

“SBA is working to ensure that all eligible small businesses have access to this funding to sustain their businesses and keep their employees on payroll,” according to Wednesday’s statement issued by Treasury Secretary Steve Mnuchin and SBA Administrator Jovita Carranza.

The statement said lending institutions regardless of size still can submit PPP loans after Wednesday. “In addition to ensuring access for the smallest lenders, we expect that providing this reserved processing time today will enhance the SBA’s loan system performance for all users who submit loans outside of this time frame.”

In Tuesday’s statement, the SBA said all other loans will be reviewed as appropriate, and regulatory guidance for this procedure will be upcoming. This comes in the wake of companies, including Ruth’s Chris Steak House and Shake Shack, receiving PPP loans before eventually declining them. 

The latest revelation came this week when the NBA’s Los Angeles Lakers received — and returned — a $4.6 million PPP loan during the program's first wave. SBA loan programs received an additional $310 billion last week to restart. The PPP was designed to help small businesses with forgivable loans in the wake of the COVID-19 pandemic.

“We have noted the large number of companies that have appropriately reevaluated their need for PPP loans and promptly repaid loan funds in response to SBA guidance reminding all borrowers of an important certification required to obtain a PPP loan,” Tuesday’s statement said. … “We remain fully committed to ensuring that America’s workers and small businesses get the resources they need to get through this challenging time.”

In addition, banks had trouble accessing the SBA E-Tran portal to enter loan information on Monday, the first day to apply for the second wave of PPP loans. A trade group that represents all sizes of banks tweeted Monday about software issues, but by Wednesday things had improved.

"Hearing that banks of all sizes across the nation have had more success accessing the #PPPLoans system today. We are working closely with @SBAJovita and @SBAGov to ensure the system will work efficiently so #Americasbanks can help more small businesses in need," tweeted Rob Nichols, CEO and president of the American Bankers Association, on Wednesday afternoon.

By mid-afternoon Monday, the SBA said it had resolved the issues and processed more than 100,000 PPP loans by more than 4,000 lenders. It added, "Unprecedented demand is slowing E-Tran response times. Currently, there are double the number of users accessing the system compared to any day during the initial round of PPP. SBA is working around the clock to help all U.S. small businesses during these challenging times." 

The $349 billion Paycheck Protection Program exhausted its funds on April 16, the same day the SBA said it would no longer take Economic Injury Disaster Loan applications. The EIDL received an additional $60 billion last week.

In just under two weeks after the PPP went online April 3, the SBA said more than 1.6 million small businesses in all 50 states and territories received payroll assistance in forgivable loans. Nearly 5,000 lenders took part, with about 20% of the loans approved by lenders with fewer than $1 billion in assets and about 60% approved by banks with $10 billion or fewer in assets. No lender accounted for more than 5% of the total dollar amount of the program.

The low-interest EIDL offers up to $10,000 to businesses experiencing a temporary revenue loss. Both programs are offered to qualified small businesses with fewer than 500 employees. Businesses applying for the EIDL in certain industries may have more than 500 employees if they meet the SBA's size standards for those industries.

The PPP loans are forgivable if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest or utilities. 

PeopleForBikes, which has continued to advocate for additional funding, has recommended retailers have all financial material prepared before contacting their lender. PFB says questions about the PPP and eligibility should be directed to their lender, local SBA office, lawyer or business insurance agent.

Topics associated with this article: Coronavirus

Join the Conversation