Afternoon update: PPP problems everywhere
Banks of all sizes are having huge access problems and that has created intense frustrations and anger among banks attempting to process the loans, but the focus needs to be on the small businesses that are not being well served. CBA is upset over the access and communications problems.
"Circumstances vary by bank but banks of all sizes have loans ready to submit, and today has been very disappointing – especially to the small businesses themselves – because banks nationwide are experiencing major problems with the SBA system," said CBA chief executive officer Don Childears.
It appears banks of all sizes are being booted off of the SBA system after a few loans are entered. We and other bankers associations are hearing this from large, medium and small banks. There have been reports of banks being booted off the SBA system after 1-20 loans, even before one loan is entered.
Banking associations throughout the U.S. had urged advance disclosure of procedures. Over the weekend, SBA shrunk the batch minimum from 15,000 to 5,000 loans but then we are told today that then those are hand processed loan by loan at SBA.
Related to this, bankers associations have requested an audit on PPP loan makeup at the end of each day so we can know patterns in time to address them.
Additionally, lots of guidance and FAQs were issued over the weekend on various topics ranging from maximum loan calculation to servicing of loans sold in the secondary market to CRA credit for PPP loans needing CRA documentation.
It also has been reported that some banks are still awaiting fees on loans closed weeks ago. And we are working with other associations to address the resulting higher FDIC premiums that will result from PPP loans being classified as C&I and the FDIC risk-calculator classifying them as high risk despite the fact they have a 100% guarantee.
One $50B bank in another state said it has 9,000 loans to enter, 100 people entering, and they've gotten 83 entered today.
SBA said today that “SBA notified lenders yesterday that pacing of applications into the E-Tran system would occur. The pacing mechanism prevents any one lender from submitting thousands of loans an hour into the E-Tran system. If a lender goes above the pacing limit they will get timed out.”