The Trump administration’s small business bailout programme hit another hurdle on Monday when the computer system processing loan applications crashed after being overwhelmed with demand on the day the US fund reopened.
Bankers from the biggest and smallest US lenders said they encountered delays and outages as they tried to log on to the system approving loans for the Paycheck Protection Program, the fund designed to keep small businesses afloat during the coronavirus crisis.
The programme was relaunched with $310bn in additional funding on Monday after its initial $349bn ran dry on April 16. It is one of the main components of the $2tn stimulus package passed last month and offers forgivable loans to businesses so they can continue to pay their employees after their revenues dried up.
But it has been beset by problems from the start, with complaints that large companies have crowded out the kinds of small enterprises and independent contractors it was designed to help. Scores of companies — including restaurant chains Shake Shack and Ruth’s Chris Steak House — have already said they would hand back tens of millions of dollars’ worth of PPP payments after a public backlash.
Banks said on Monday that the electronic system designed to handle applications, known as E-Tran, had stopped working almost as soon as it was launched. Some said they had been unable to load the web page at all, while others said they could load the portal but were unable to log in.
“As soon as it opened at 10.30am, the system crashed,” said Cynthia Blankenship, vice-chair at Texas-based lender Bank of the West. “First the page would not load, and then it just showed us an error message. It was very frustrating.”
Ms Blankenship said her bank was able to process 15 of the 300 applications it had prepared. She added that staff had spent the day trying to reload the website on both mobile and desktop computers, but to no avail.
A person familiar with E-Tran’s operations told the Financial Times that the system could run extremely slowly and return errors if it was overloaded with demand.
The Small Business Administration, which is in charge of running the programme, hoped to avoid such a situation by creating a side process for lenders to submit 15,000 or more applications in a single batch. That 15,000 threshold was lowered to 5,000 on Monday after smaller banks argued that they were at a disadvantage.
Ms Blankenship’s complaints were echoed by Robert Fisher, chief executive at Tioga State Bank in New York state, which by mid-afternoon had processed seven out of the 85 to 90 claims it had prepared.
“They always knew they were going to have a high volume of claims,” Mr Fisher said. “They should have been prepared for this.”
One bank lobbyist said he had been told of another situation in which it took three-and-a-half hours to process a claim.
The SBA said “unprecedented demand” was slowing E-Tran’s response times. “Currently there are double the number of users accessing the system compared to any day during the initial round of PPP. SBA is actively working to ensure system security and integrity while loan processing continues,” the US government agency said.
At a press conference on Monday, President Donald Trump said he heard there had been a “glitch” with the PPP’s second rollout, but added that it had worked “out well” in the first round of funding. “We’re relying on the banks to go out and do an accurate job,” he said.
Mr Trump also added that he would “gladly” list the names of companies receiving the aid, unless there was a legal obstacle.
But others criticised the administration for not being set up to handle the volumes of claims.
“It was inevitable that when they flipped the switch, there would be a huge amount of demand,” said Paul Merski, executive vice-president at the industry group Independent Community Bankers of America. “This was a replay of the organisational mess that happened last time around.”
The SBA said that by 3.30pm on Monday its system had processed 100,000 claims. It did not say immediately how much money had been approved.
Bankers have warned that a surge in demand could see the money run out in less than a week, which could result in Congress being forced to negotiate yet another round of funding.
Additional reporting by James Politi in Washington