The Small Business Administration's electronic system is crashing as thousands of small business owners are hoping to apply for coronavirus-related loans. Billions of dollars are being sought by small businesses trying to keep their businesses open and pay employees during the pandemic.
"E-tran" - the name of the SBA's loan system - has been wrought with errors and extreme slowness since the launch of the massive small business rescue effort Friday. Banks must use E-Tran to authorize the loans.
Known as the Paycheck Protection Program, the rescue effort aims to forgive the loans if businesses vow to maintain their payrolls. The SBA has approved $38 billion in loans.
Politico reports that in addition to breaking down, E-Tran is requesting loan documentation that lenders didn't think they would have to provide. Other questions, like how to tally payroll costs in the loan applications, also remain unanswered.
Many banks have shown enthusiasm about the program. Bank of America reported Monday that it had received 212,000 applications seeking $36 billion. Others have been slow to start, like JJPMorgan Chase and Citigroup, but have begun taking applications.
But because of the difficulty in processing applications and participating in the program, community lenders warned that their customers are at risk of losing out on loans - especially those in small, rural towns. There are fears that community banks could be put at the back of the line as bigger banks have more resources to get their loans through.
We will see what happens.
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