Coronavirus: Rollout of SBA loan program marred by glitches

Coronavirus

(CNN) —The rollout of the Small Business Administration’s new loan program—a critical piece of the $2 trillion stimulus package—has been marred by glitches, system breakdowns and general confusion.

It’s the backbone program of the largest economic rescue package in U.S. history, $350 billion for small businesses, all in forgiveable loans, to save their employees amid the avalanche of layoffs nationwide.

But despite need, and the president’s effusive praise, its rollout has been plagued by glitches, technical failures and confusion, accelerating the anxiety for millions of small businesses on the precipice of collapse.

“It got off to a bad start last Friday,” said Larry Kudlow, Director of the United States National Economic Council.

But administration officials and lawmakers say the issues are to be expected.

“Any time you design a program that applies to 90 percent of the companies in America and spend $345 billion dollars and you have six days to do it, you’re going to have glitches,” said Sen. Marco Rubio.

The scale of the program is more than 10 times what the Small Business Administration guaranteed last year, and government officials had just seven days to turn legislation into an economy-saver.

“The whole point of this program is to keep 50 percent of America back at work so that small businesses can reopen quickly,” said Treasury Secretary Steve Mnuchin, one that would provide loans of up to $10 million to businesses with under 500 employees.

But more than that, these loans would be forgiven, essentially turned into grants if the money is used to pay salaries, payroll expenses or business costs like mortgages and rent.

But the exceedingly tight timeline left many of the details too open-ended for some lenders to even get online in its initial days, multiple bank executives told CNN.

The largest community bank trade group fired off a letter Saturday night that noted “community bankers remain frustrated with a myriad of unanswered questions and lack of clear instruction on how to complete loans through the SBA.”

And when guidance was provided, it came just hours before the program was set to launch.

The largest banks initially put limits on which customers they would serve, infuriating some business owners.

Others repeatedly ran into notices saying websites were down or under maintenance “due to the sheer volume of applications.”

All as lenders faced the government’s own technological issues, as the SBA’s system for processing loans was down for hours at a time, several sources told CNN.

The rocky start is something Trump himself has tried to look past. However, there has been progress in the days since the initial launch.

“As of today SBA has processed over 70 billion dollars in guaranteed loans,” Trump said.

And each day, administration officials, lenders and small businesses say, the process is starting to smooth out, and lawmakers are already considering adding another $250 billion to the program, underscoring both the urgency and volume of the crisis for small businesses—but also their faith that the problems will be worked out, even if participants say some of the current optimism isn’t merited.

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April 24 2021 08:00 am

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