Miami, FL — U.S. Senator Marco Rubio (R-FL), Chairman of the Senate Committee on Small Business and Entrepreneurship, released an update on the Paycheck Protection Program, which is in its first full week of operation. According to recent reports, more than 480,000 loans valued at more than $124 billion were approved as of 2:30 PM EDT, Thursday, April 9.
“Recent reports indicate that the Paycheck Protection Program has already saved an estimated 12.3 million jobs,” Chairman Rubio said. “In a time of economic uncertainty, keeping America’s small businesses employed is critical. The implementation of the program is moving in the right direction, and it has to as businesses need cash in their hands now. I appreciate the around-the-clock work that the Administration is doing to address the challenges of the program, and their continued engagement with the SBA and Treasury to ensure these improvements are happening.”
Current Challenges with Remedies:
- Money: Additional funds need to be approved by Congress as soon as possible for small businesses to continue to access the program.
Solution: Chairman Rubio worked with the Department of Treasury to formally request an additional $250 billion for the program. Today, Senate Democrats blocked the approval of additional funds.
- Existing Customers and Lender Liquidity: There continues to be reports that banks are providing loans to their customers first, and that small businesses who do not have an existing banking relationship, or who bank with a community bank that could face liquidity issues, may be disadvantaged. Increased coverage is more likely to come from the greater number of lenders and non-traditional lenders being added to the program.
Good News: The Treasury released the non-bank lender application to approve new non-bank lenders into the program on Wednesday. This will allow businesses without existing customer relationships to access PPP loans. The Federal Reserve announced further details for its lending facility to create a secondary market for PPP loans and relaxed regulations on banks’ leverage ratio for all PPP loans on Thursday.
- Lender Forms: Lenders need additional documentation from the SBA and Treasury in order to properly close loans and disburse funds to small businesses.
Good News: Treasury released an updated FAQ document that allows lenders to use their own note or an SBA promissory note, which would likely be the standard 7(a) note.
- Lender Access: New bank and non-bank lenders need to be approved expeditiously in order to ensure non-traditional lenders are able to help provide needed capital to small businesses who do not have existing bank relationships and assist underserved markets.
Good News: SBA reports that more than 400 new bank lenders have been approved, and they have also reinstated a number of lenders who had previously participated in the 7(a) program. The non-SBA lenders portal has been up and running since yesterday and Treasury is now accepting applications for non-bank lenders.
- Technology: There have been reports SBA’s E-Tran system for lenders has been slow and has crashed.
Good News: SBA reports that E-Tran, while slower at peak volume times, has been fully operational and has not crashed. SBA has been working to add server capacity to the system throughout the weekend and into this week. They have also devoted resources to assist lenders with any issues accessing the program, which are largely new lenders unfamiliar with E-Tran. Additionally, SBA is assisting lenders who may have their own internal IT problems that inhibit them from accessing E-Tran.
- Disbursements: A majority of lenders have been waiting for further guidance to disperse approved SBA loans to small businesses.
Good News: Lenders have been approving loans with the assurance that guidance governing the loan authorization, note, and closing process would be made available for them to close the loan and disburse funds with the confidence that the guarantee from SBA is intact. In the FAQ Treasury released on Wednesday, they clarified the note a lender may use, and also provide guidance that lenders have up to 10 days to disburse a loan after approval.