The Paycheck Protection Program’s soft launch received mixed reviews, creating uncertainty over when the portal will be open to all participating lenders.
The Small Business Administration limited access on Monday to community development financial institutions, minority depository institutions and other mission-driven lenders, representing about a tenth of all the companies participating in the emergency loan program.
While most larger participants had no major issues, smaller lenders said they had too little time to prepare their systems — the SBA didn’t release the application forms until late Friday and it was unclear what the portal would look like until the weekend — and as a result they couldn’t take full advantage of the head start.
“It’s a challenging situation for us,” said Robert James II, director of strategic initiatives at the $48.4 million-asset Carver Financial, a Black-owned bank in Savannah, Ga., that has yet to make any loans under the restart.
“Our people were working over the weekend, but when you put out 130 pages or so of guidance and brand-new applications, there are still a lot of questions,” James said, adding that he expects Carver to start processing applications on Wednesday.
“It feels like we’ll just be swimming with the sharks once we get ourselves up to speed,” James said.
Struggles by lenders such as Carver have led some advocacy groups to request more time and concession for smaller PPP participants. And the SBA, which promised community financial institutions three days of exclusive portal access, has not yet confirmed that all lenders will be allowed to process applications on Thursday.
The agency would only say in a Monday press release that wider participation would begin in “a few days.”
“It’s not set in stone that other financial institutions will be able to access the portal on Thursday,” said Maureen Frank, CEO of New Haven Bank, a $155 million-asset community development financial institution based in New Haven, Conn.
“The SBA is very aware of their responsibility to take care of the needs of” community financial institutions, Frank added.
Lenders that have not gained access to the portal are spending more time talking to clients as they wait for access.
"We're having plenty of dialogue” with customers, said Carson Lappetito, president of the $2 billion-asset Sunwest Bank in Irvine, Calif. “There's a lot of interest, so we're taking care of our existing clients and new customers ... We have our entire relationship management team on the phone with clients and prospects walking them through the renewed program."
More than 1,200 businesses have expressed interest in obtaining a PPP loan from Sunwest, Lappetito said. About a fifth of the inquirers are coming from businesses that would be first-time participants.
“We’re gearing up for a 24/7 operation,” said Jack Heath, chief operating officer at W.T.B. Financial in Spokane, Wash. “Clients who need to access this program are under incredible financial stress. There will be a sense of urgency to get in and get funded. We’re going to be very aggressive in processing applications.
W.T.B., the parent company of the $1.9 billion-asset Washington Trust Bank, will wait patiently for its start date, Heath said, adding that a longer wait time could benefit bigger banks that want to see how the initial rollout goes.
NexTier Bank in Kittanning, Pa., has sent out multiple communications to customers, including existing PPP participants, regarding the uncertain timing, said Maria Amoruso, the $1.7 billion-asset bank's chief marketing officer. NexTier also plans to hold two webinars Wednesday.
Anxiety among smaller lenders had been building over the day’s leading up the PPP’s relaunch.
The National Bankers Association, a group representing minority-owned banks that James chairs, used a Jan. 9 letter to the SBA to urge the agency to consider delaying PPP’s restart to give smaller lenders more time to prepare.
“The hasty rollout puts enormous pressure on all lenders — especially the smallest banks,” the association wrote.
The National Bankers Association and the National Association of Federally-Insured Credit Unions have also asked the SBA to consider establishing separate portals for small institutions to upload PPP loans. NAFCU wants the agency to open a dedicated processing window for credit unions with assets of less than $10 million.
“A lot of the customers we serve … don’t have their payroll data in some cloud-based software where they can press a button and get this material,” James said. “These are really small mom and pop businesses that need time to pull their information together. They need time even to understand the program.”
Though the SBA hasn’t issued any data, lenders said they expect overall volume on Monday was relatively light since participation was limited to community financial institutions making loans to first-time PPP borrowers.
New Haven Bank processed several loans without incident Monday, but Frank said she expects “a big turnout” Wednesday when the portal opens for second-draw loans.
Sunrise Banks in St. Paul, Minn., processed more than 70 loans Monday without incident, said David Reiling, the $1.4 billion-asset bank’s chairman and CEO.
“It really looks like SBA … may have solved the technology issues” that plagued the PPP’s initial rollout last April, Reiling said. “I’m very pleased. This was a good start.”
Congress allocated $284.5 billion for a new round of PPP lending as part of the
In addition to new loans, the new version of PPP includes a provision allowing existing borrowers with 300 or fewer employees to apply for up to $2 million of fresh capital, if they can show a 25% reduction in revenue in at least one of last year's quarters.
The SBA released two interim final regulations providing
Paul Davis contributed to this report.
