Banks were overwhelmed this past weekend by the first wave of applications for Paycheck Protection Program (PPP) loans under the $2.2 trillion CARES Act.
But BrandSource is urging members to not be discouraged by these initial logjams, as the $350 billion earmarked for the forgivable payroll loans is being dispersed on a first-come, first-served basis.
“That is why it is imperative for members get their applications in early to their local lenders while the system works through these issues,” said Dave Meekings, Chief Technology Officer at AVB Inc.
Besides the sheer volume of applications, the process was also hampered by the inability of lenders’ computers to communicate with those of the Small Business Administration (SBA), which administers loans under. According to NBC News, the government agency uses a proprietary system to guarantee loans and generate loan numbers, forcing some banks to enter applicant information by hand.
Senior executives at Bank of America and JPMorgan Chase, two of the nation’s largest lenders, told NBC their companies are working to automate and speed up the approval process, while community banks — locally owned retail institutions with less than $1 billion in assets — appeared more successful in processing and even making loans, especially for existing customers.
Last week the Treasury Department simplified the PPP application form based on feedback from top banking officials, but also set the interest rate at 1 percent with a two-year repayment period for the unforgiven portion of the loan, compared to its original guideline of a 0.5 percent fixed interest rate and a 10-year period before coming due.
Besides the PPP loans, which are designed to help small businesses make payroll and keep workers employed, BrandSource members may also apply for economic disaster loans through the SBA.