After the small-business relief program reopened this week, the Trump administration claimed it has been very successful despite complaints by many bank lenders and small businesses about the speed, size, and structure of the initiative.
“We’re going to see many government officials with their arms in a sling because they’re spending so much time patting themselves on the back,” said Garry Brammer, a restaurant owner in Pendleton, Indiana. “It’s irritating because many of us small businesses, we’re not seeing anything yet.”
Treasury Secretary Steven Mnuchin said on Tuesday, however, that “the program has been an incredible success. It’s impacted over 30 million workers so far.”
“And by the time we get through this funding, I think it will have impacted over 60 million workers, which, as I’ve said before, is about half the private workforce, supporting small businesses,” Mnuchin added.
There appears, at times, to be a contradiction between what Trump administration officials are saying about the relief program and how some small businesses themselves perceive it.
The program has successfully delivered billions of dollars in rescue funds to 1.6 million businesses and counting, an unprecedented feat. But multiple bank lenders complained this week that the program’s website has been extremely slow and unreliable, with it crashing multiple times and causing banks to be kicked out of the system due to unknown errors.
“I think when politicians say the program is going incredibly well, they mean there’s huge demand for it, which is true. But the execution of it has not been seamless, the rollout has not been that great,” said Truman Lam, the owner of Jing Fong, the biggest Chinese restaurant in New York City.
The Small Business Administration’s relief program, called the Paycheck Protection Program, provides forgivable loans, through lending institutions, to small businesses hurt by the pandemic as long as they maintain payrolls. The program was initially funded with $350 billion as part of the massive $2.3 trillion CARES Act relief package. The program was given an additional $321 billion last week after the initial $350 billion ran out within just two weeks.
Some small businesses say that instead of using banks and financial institutions as middlemen in the lending process, the federal government should have loaned businesses the money directly, potentially making the process easier and quicker.
”I would rather have gotten the credit from the government directly,” said Andrea Tromberg, owner of her own small law firm in Boca Raton, Florida.
“This application process created a frenzy and was not fair on the banks or us small businesses. The government could have credited me directly using my tax returns instead of us racing through this loan process. It created a lot of anxiety for small businesses,” Tromberg said.
Jovita Carranza, the head of the Small Business Administration, admitted in a tweet on Monday that “unprecedented demand is slowing our system response times” in regards to how many loan applications it can process and accept.
Still, Carranza has staunchly defended her agency’s performance in providing small business relief, highlighting in an opinion piece last week that the first round of the program successfully processed 14 years worth of loans in just 14 days.
“The PPP is working, even if it hasn’t been glitch-free,” she said in a USA Today opinion article on April 20. “The SBA has been working day and night, seven days a week, to add capacity and to identify and correct technical challenges.”
One common problem faced by a large number of small businesses trying to apply for the relief loans is that big national banks were much slower at processing and sending loan applications to the SBA than local, community banks. In the first week of the program, big banks lacked the systems and procedures to handle a large number of SBA loan applications.
Multiple small business owners told the Washington Examiner that they opened new bank accounts with smaller, local banks or credit unions after facing delays and issues submitting loan applications with national banks.
Many SBA-approved bank lenders say a lack of clarity from the agency regarding the guidance and rules of the program was a significant cause for delays in submitting loan applications at the start of the program and continues to be a problem now.
“The rules are being changed in the middle of the third quarter, and small-business owners are the ones being disadvantaged,” a banking executive said on Tuesday, referring to a change the SBA made on Tuesday about how banks can submit application data and how many applications they can submit at one time.
“The rules are being changed, again, in the middle of the process,” said the executive, who wished not to be named.
Looking ahead, one of the key concerns that most small businesses, who have received their loans, are struggling with, is how much of their loans will eventually be forgiven.
“I’m grateful to have access to have a program like this to help us, I just hope they’re smart about these forgiveness rules,” said Miren Oca, owner of a swim school in Miami, Florida.
“I’m concerned with the forgiveness rules of the program, which portion of the loan will be forgiven because the rules regarding this are not clear, and I don’t know how it will work out,” Oca said.
