By CBJ News Staff
Iowa banks struggled to get Paycheck Protection Program (PPP) loans processed on Monday after the second round of the U.S. Small Business Administration opened to technical problems that seemed much like a reply of the troubled first round.
The SBA opened its processing portal at 9:30 a.m. on Monday morning for the PPP, which allows businesses to take out loans for operating expenses that can be turned all or partly into grants if they continue to maintain their payroll numbers. About $349 billion allocated by Congress for the first round of the program was exhausted quickly, leaving countless loan applicants empty-handed. Another $310 billion was approved for the round that began Monday.
“Round two did not go much – if any – more smoothly than the first go-around,” said Dave Caris, CEO of the Community Bankers of Iowa, after hearing feedback from members of the association throughout the day Monday. He said community bankers had learned how to access the SBA’s electronic filing system to submit applications, but once in the system, he said many were getting error messages or being shut out, requiring them to begin the process all over again.
One bank had 21 loans prepared to submit for SBA review, but after trying throughout the day, was only able to receive five approvals, Mr. Caris said. Banks are rushing to get loans approved because they expect the funds to run out quickly, as they did in the first round.
“The tragic thing is, the customers need this money and some of the banks have been working day and night to get these loans processed,” Mr. Caris said. “I know of several banks that have been working 24-hour shifts.”
Iowa Bankers Association CEO John Sorensen was hearing of similar difficulties. Some problems were expected, he said, because the SBA’s loan approval system is only designed to handle a typical volume of about $30 billion in loans per year, and is now being called on to process about $700 billion in under one month. Nevertheless, he said it’s disappointing that the SBA didn’t solve the forseeable problems.
“I’m really proud of our bankers and the way they’re supporting small business through the PPP,” Mr. Sorensen said. In the first round of the PPP, he said Iowa banks originated 20,000 in loans totaling about $4 billion, helping employers retain about 350,000 jobs. Iowa was rated seventh of the 50 states in an analysis of the state business payroll covered by the first round, which Mr. Sorensen said was a direct result of the responsiveness of Iowa bankers to community needs. CBJ