Fri. Jul 19th, 2024

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Big banks temporarily shut out of small business loan portal, Treasury and SBA announce

Big banks temporarily shut out of small business loan portal, Treasury and SBA announce

The Treasury and the Small Business Administration said Wednesday that they will temporarily shut out big banks from the electronic loan portal used to submit applications for the government’s small business relief program.

The move applies to any lender with more than $1 billion in assets for an eight-hour time period starting at 4 p.m. Wednesday, according to an email obtained by CNBC.

The agencies want to “to ensure access to the PPP loan program for the smallest lenders,” according to the email.

“SBA and Treasury will evaluate whether to create a similar reserved time again in the future,” the agencies said.

The Paycheck Protection Program, a major component of the administration’s response to the coronavirus pandemic, is in its second round after its initial $350 billion funding was quickly depleted. The SBA’s E-Tran system, which is the online portal lenders enter application information into to obtain a loan number prior to disbursing funds to the borrower, has been plagued with issues in both rounds of funding.

After banks complained that E-Tran has been unreliable and difficult to use, regulators said they would constrain access to it to help the overall program function. The program has also been criticized as favoring the largest customers of banks, like publicly traded companies and big restaurant chains, over small mom and pop businesses.

Now, the U.S. agencies appear to be experimenting with reserving blocks of time for smaller banks, blocking access to big lenders in an attempt to improve the odds that small customers can have their loans approved.

Treasury Secretary Steven Mnuchin and Small Business Administrator Jovita Carranza said Wednesday in a statement that “in addition to ensuring access for the smallest lenders, we expect that providing this reserved processing time today will enhance the SBA’s loan system performance for all users who submit loans outside of this time frame.”

Trade groups representing banks lambasted the move. Financial Services Forum President Kevin Fromer said the SBA’s move slowed the ability of 800 banks to apply to PPP.

“Relief for potentially thousands of small business owners and their employees will be delayed,” Fromer said. “A better solution would be a fully operational system that allows banks of all sizes to provide support to Main Street.”



Jacob Lee

Jacob Lee is the writer behind all our Trade and Business policy related stories. His flair for writing, editing has led Front Statement to have a standing among the best news reporting blogs. Business trends, market fluctuations, and keeping track of the upturns and downturns of the economy are additionally taxed onto our able writer, who handles it with ease and elegance.

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