Virus Loan Program Approves More than $52 Billion in Relief

The Trump administration said it’s approved more than $52 billion in loan request for small businesses so far in the relaunch of a coronavirus relief program, even as lenders say they’ve struggled to submit applications and advocates worry that funds will run out before many mom-and-pop firms get help.

The U.S. Small Business Administration said it processed more than 475,000 loan applications from more than 5,100 lenders who disburse the funds as of 1 p.m. New York time. The aid initiative for small businesses under the Paycheck Protection Program offers loans of as much as $10 million meant to keep workers employed amid state stay-at-home orders.

The program restarted Monday April 27th, with an additional $320 billion that Congress approved last week, after the initial $349 billion ran out on April 16 in just 13 days. The relaunch has been rocky, with lenders reporting they can’t access SBA’s system amid a flood of applications. The program allows loans to become grants if proceeds are spent to maintain payrolls and for certain expenses for two months.

The SBA told lenders to stop using robotic systems to help submit applications so that the system “will be more reliable, accessible, and equitable for all small businesses.”

Treasury Secretary Steven Mnuchin said on Fox Business that SBA teams worked through the night to address issues, but lending groups said access was still spotty. Paul Merski of the Independent Community Bankers of America compared it to trying to fix bad plumbing by replacing some washers and faucets.

“The bottom line is the system just cannot handle volume,” Merski said. “It’s going to be ongoing frustration and hopefully they can make improvements, but the system is the system.”

During the first round, the SBA guaranteed 1.66 million loans totaling $342.3 billion that banks disburse, according to an agency report. Mnuchin has said more than 1 million firms with fewer than 10 employees were approved for loans, with an average loan of $206,000.

But reports of large public companies and big chains getting loans have sparked outrage. Mnuchin announced that all loans of more than $2 million will be audited before they are forgiven to ensure the borrower’s certification that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant” was justified. Firms have until May 7 to return their loans without penalty.

“I want to be very clear it’s the borrowers who have criminal liability if they made this certification and it’s not true,” Mnuchin said on CNBC. “We will make sure that what was the intent for taxpayers is fulfilled here.”

Mnuchin said he’s glad large public companies and entities including the Los Angeles Lakers are now returning their loans. More than $2 billion from the first round was declined or returned and will now be made available, SBA Administrator Jovita Carranza said in a tweet.