Computer problems at the Small Business Administration have been causing delays with the US government’s emergency $349 billion lending program. Reports suggest the SBA’s loan processing failed altogether on Monday, resulting in a bottleneck for loans to be approved and distributed.
Adding to the woes of small business owners was confusion and a lack of clarity about which documents needed to be supplied by customers who wanted to participate in the bailout.
Cash-strapped businesses are facing failure if they can’t secure extra cash, with many owners citing issues with rent, mortgage payments, insurance and utilities plus taxes they still have to cover despite recent and widespread staff layoffs.
According to the Washington DC-based SBA, it has received over 275,000 applications for loans, totalling $74 billion since the emergency relief program was launched. The delayed response is in stark contrast to the initial assurance by Treasury Secretary Steven Mnuchin that loans could be arranged and funds moved to businesses’ bank accounts in the same day.
In addition to the confusion there are reports that many community banks, which serve smaller communities in rural areas have not been able to access the SBA’s system either.
The lifeline of loans that should go to business owners and freelancers via the Paycheck Protection Program has been introduced in order to help companies keep on their workers, or acquire new help to keep struggling businesses afloat.
However, businesses owners claim they have also been having problems applying to banks, including JP Morgan Chase and Citibank, which say they aren’t ready to start processing applications. Other financial institutions, including Wells Fargo, have sent applicants away who have been over their lending limit.
Meanwhile, Mnuchin has since announced that the Trump administration would ask Congress for an extra $250 billion to beef up the program if needed.