Website For 2nd Round of Small Business Loans Crashes in Minutes

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The Small Business Administration opened its second round of applications for the Paycheck Protection Program yesterday, which was plagued by a host of technical issues, as well as a fierce backlog of applications from the first round which has resulted in the organisation saying it is “deeply frustrated” with the rollout so far.


The SBA’s processing site, known as E-Tran, has been inundated with applications for the paycheck protection program, which in its first round was completely out of funds in less than two weeks when funds ran out on April 16th. The E-Tran system has had a number of technical issues as it attempts to process tens of thousands of applicants.


Initially, Congress approved $349 billion in funding for the loan program, which lasted just a few days. The second round of funding introduced an additional $310 billion in loans for the SBA to distribute.


Typically, the SBA is responsible for handing out around $25 billion worth of loans to small businesses each year, with the recent pandemic, it’s now responsible for handing out $660 billion in paycheck protection program loans in a matter of weeks.


One report claims that the SBA’s system crashed just four minutes after relaunching at 10:30am.


A spokesperson for the SBA has said that a “pacing mechanism prevents any one lender from submitting thousands of loans an hour into the E-Tran system. If a lender goes above the pacing limit they will get timed out,” they added.


However, a banking industry source told CNN that “the SBA system simply cannot handle the volume of applications banks have processed from America’s small businesses, adding that “unless SBA set the pace at one an hour (or less), this is nothing but misdirection. Banks are working to deliver assistance and SBA is passing the blame,” they said.


An industry source also told CNN that “if I were betting, I would guess the money is gone in two and a half or three days.”


The SBA told Fortune that the “SBA notified lenders yesterday that pacing of applications into the E-Tran system would occur, meaning all lenders would be able to submit at the same rate per hour.”


The SBA’s self-described “unprecedented demand” slowed its E-TRAN system, but the SBA processed 100,000 loans from more than 4,000 lenders by 3:30pm that same day, which, according to CNBC reporter, Kate Rogers that this is “more than double the number of users accessing the system compared to any day during the initial round of the program.”


The larger looming question remaining is who will get their loan approved first, and what the eligibility criteria are. Some small business owners are crying foul that large, publicly traded companies received millions in loans while they were left empty handed, adding that large companies should not have been eligible in the first place.


Congress failed to make modifications to the criteria, and there are reports circulating that the program might be operated on a first-in, first-served basis up until the SBA confirmation. While there might be billions in additional funding for the SBA, industry figures have made it clear that there is not enough PPP funding for all applicants to receive a subsidy.


According to reports, “many institutions continued taking applications anticipating the money would eventually be replenished. Now that it has been, lenders can input that information into the official SBA system… while aides on Capitol Hill working on the SBA program have been assured E-TRAN will be up and running smoothly, a number of other last-minute changes have thrown a curveball for some financial institutions.”


These last minute changes included a notification from the SBA with extra guidance on how the additional rollout would continue this week. This guidance included a note to large institutions uploading a backlog of applications, who would be able to submit a one-time only list of 15,000 applications.


In addition, there was the confirmation that the E-TRAN system would process applications on a first-come, first-served basis, and that no one financial institution could loan out more than 10% of the total PPP funds, or $60 billion.

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