Small business loan program resumes with new funding

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The small business loan program that received a new cash injection last week reopened with a crunch on Monday as the Lakers became the latest prominent name in refund money received under a program designed to boost struggling small businesses during the COVID-19 pandemic.

Despite early problems and overwhelming demand, the Small Business Administration processed over 100,000 Paycheck Protection Program loans by over 4,000 lenders as of 3:30 p.m. EST. Some participating lenders have reported difficulty accessing the SBA application website.

Twice as many users attempted to access the app’s website on Monday compared to any time during the program’s first round, SBA administrator Jovita Carranza said.

President Trump on Friday signed the bill that gave the program 310 billion dollars in new financing on top of the $ 349 billion Congress authorized last month, which was spent within days. Now there is a risk that the program will run out of funding a second time even faster.

Senator Marco Rubio (R-Fla.), One of the creators of the Paycheck Protection Program, warned that the demand far exceeded the money allowed by Congress last week.

“The hard truth is that the extraordinary demand is even higher,” Rubio wrote on Twitter.

The Ohio-based Fifth Third Bank warned applicants in an email that “given the overwhelming number of applications already submitted to Fifth Third Bank and other lenders in the United States, it is highly unlikely that all applicants receive funding “.

The intense demand for the small business program comes as several large businesses have repaid loans they received in the early days of the program. The Lakers announced Monday that the franchise would bring in $ 4.6 million.

The Lakers – like Shake Shack, Ruth’s Chris Steakhouse, Potbelly and a handful of others – have faced a backlash on social media and from lawmakers and Trump.

The SBA revised its guidance last week to clarify that large publicly traded companies with other funding options should not apply for the loans and warned that recipients could be asked to certify that the money was needed to maintain. the operations. The Treasury Department has urged all companies that have received loans and cannot certify such a need to return the money by May 10.

So far, more than $ 2 billion in first-round funding has been refused or refunded, Carranza said. A list of all PPP loan recipients has not been released, although some publicly traded companies have disclosed the information in the files.

Capitol Hill Democrats have demanded that the program develop guarantees to ensure that the money gets to the businesses that are really small and really need it. The loans are repayable if employers agree to keep most of the workers during the pandemic.

“Every loan that is a godsend to an applicant who does not really need it translates into one less loan given to a struggling small business owner whose employees could be really helped by this financing,” wrote several senators. Democrats in a letter to Carranza and the Treasury. Secretary Steven T. Mnuchin.

Bank of America CEO Brian Moynihan told CBS ‘Face the Nation on Sunday that the bank had $ 50 billion in apps ready to launch when the program went live at 10:30 a.m. Eastern time Monday. JPMorgan Chase prepared 150,000 entries.

“Our member banks across the country are deeply frustrated with their inability to access [the] system ”, American Bankers Assn. President Rob Nichols said in a tweet. “We have raised these issues at the highest level. Until they are resolved, U.S. banks will not be able to [to] help more struggling small businesses.

In addition to criticism that large companies were able to access the program, the Trump administration has also been criticized for allowing large banks to access the program more easily than smaller ones. Banks have also favored their clients, leaving out microenterprises or entities without a pre-existing banking relationship. The last financing bill provided for $ 60 billion for these companies, which complained that they were excluded in the first round.

Rubio said some of the delays faced by banks on Monday were linked to a new “stimulus system” meant to ensure all banks would be able to submit claims instead of a few.

The entities that receive the funding will soon have to confront the federal government’s rules as to whether the loan will have to be repaid or whether it will be canceled. The program was designed to cancel the loan if employers at least maintain their pre-pandemic payrolls for eight weeks after the loan is granted.

For some employers, that clock has already started even as many states remain subject to stay-at-home orders. This could make it difficult for employers – like a restaurant owner – to pay a full roster of employees.

The eight week rule “is very restrictive for many small business owners who are not yet operational. Returning to pre-crisis levels is a heavy burden for many companies, ”said Holly Wade, director of research and policy analysis at the National Federation of Independent Business.

The group is seeking clarification on these SBA and Treasury rules.

“A lot of small business owners are in the eight week window now,” she said. “They have questions about payroll, expense definitions” and other questions about how the pardon rules work.

Times writer Russ Mitchell at Berkeley contributed to this report.

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