Banks say portal to blame for delays

Under pressure to deliver relief to hundreds of thousands of small businesses, banks of all sizes are complaining that the federal government’s loan-entry portal is behind delays in the program.

Nine industry groups representing the nation’s banks and credit unions sent a letter late Tuesday to the Small Business Administration and Treasury Secretary Steven Mnuchin voicing concerns over how long it is taking to submit loans via the SBA loan portal known as E-Tran.

“With the start of the second round of funding many lenders are having significant problems submitting loan applications into the SBA’s system, preventing them from delivering this critical financial assistance to small businesses that desperately need it,” the groups say in the letter.

They added that “if the pace and performance of the E-Tran system cannot be improved, then we ask that you share that information with the public to help manage expectations for all of the small businesses still counting on PPP for a lifeline.”

The Paycheck Protection Program, a major component of the administrations’ 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.

When the program re-launched Monday at 10:30 a.m. after Congress approved an additional $320 million in funding for PPP, it only took four minutes before users began receiving error messages and reporting they had been shut out of the system.

A spokesman for the SBA said in an email to CNBC that “the PPP program is working” and that the agency “is providing real-time data updates, proactively identifying and resolving issues.”

Bank of America said Tuesday that it only got 1,000 applications processed and approved by the SBA out of the 184,000 total the lender had submitted on Monday, a spokesperson said in an email to CNBC. Bank of America also noted that it had an additional 48,000 applications ready to submit to the SBA.

Wells Fargo said that it had submitted more than 100,000 applications to the SBA on Monday, according to an internal email sent by the head of Wells Fargo’s small business, Steve Troutner, on Tuesday. However, the bank said that it only received responses at the rate of about 80 per hour, which is well below the 350 loans per hour restriction.

That application limit rule was announced on Sunday evening by the SBA and has led to “very slow processing times for all participating lenders,” Troutner said in the email.

In the letter to the SBA and Treasury, the nine industry groups have also requested transparency from the government agency in order “to help us explain to our members what is causing the problem and how it will be resolved.”

“We understand resources are limited and SBA and Treasury are fielding many questions from a great number of lenders, potential borrowers, and others,” the letter states, “however we have found the lack of transparency and timely guidance on the PPP process impedes the funding of loans to small businesses in need.”

With reporting by Kate Rogers