One-fifth of emergency loan program's funds already committed
The Paycheck Protection Program has received lender approvals equal to a fifth of its original funding authorization.
Lenders have submitted about 265,000 applications for $71 billion in loans, Small Business Administration officials said during a Tuesday conference call with 1,800 lenders organized by the National Credit Union Administration.
The SBA also provided some clarity on issues that have worried lenders, including expected turnaround times to provide funds to borrowers and the status of promissory notes.
Lenders are required to provide borrowers with initial funds within five days of receiving an SBA loan number, Rosemarie Drake, chief of the 7(a) program office, said during the call.
The number is issued when a loan application is submitted to the SBA.
To hasten those efforts, agency officials said lenders could use their own promissory notes to close loans, rather than wait for an agency-drafted instrument. It’s a step many bankers have been reluctant to take.
Dianna Seaborn, director of the SBA’s Office of Financial Assistance, said the agency would issue guidance soon on how banks could apply for loan fees associated with the program, though she added that fully funding loans is a prerequisite for receiving payments.
“We’re expecting banks to fund as quickly as possible,” Drake added.
SBA Administrator Jovita Carranza said during a White House conference call with bankers on Tuesday that 3,200 lenders have approved loans, including 300 new participants.
But the program had its share of miscues in its earliest days.
Noah Wilcox, CEO of Grand Rapids State Bank and chairman of the Independent Community Bankers of America, told President Trump during the White House call with bankers that an informal survey of community banks found that a third still lack access to the SBA system.
“Those community banks have been boxed out, unable to serve their communities and their customers,” Wilcox said. “Just imagine the awesome power, and the difference in the community, if 100% of those banks had access to the system.”
Bankers have also complained about login issues on the program’s first day and a system interruption on Monday that locked many of them out for hours.
The SBA has also been criticized by many, including Sen. Marco Rubio, R-Fla., for dragging its feet in letting nondepository lenders participate. The SBA and the Treasury Department, the program’s administrators, are putting the finishing touches on an application form for fintech lenders.
“It’s under construction,” Seaborn said during the NCUA-hosted call. “We’re refining it and hope to have it up within a day or so.”
SBA officials defended the agency’s performance in the program’s earliest days, while asking lenders for patience.
“We appreciate there are frustrations,” Seaborn said. “We’re flying the plane and building it at the same time. Things change hourly.”
Given the surge in demand, the Treasury said it would ask Congress to authorize another $250 billion to the program. Treasury Secretary Steven Mnuchin said during the White conference call that he hoped Congress would approve those funds by the end of the week.
Paul Davis contributed to this article.