Editor’s note: This story has been updated as of Saturday, May 2.
PROVINCETOWN — The $310 billion that was added to the Payroll Protection Program (PPP) by Congress last week could be gone by the time you read this article.
The Small Business Administration’s application portal, where lenders submit their customers’ loan requests, went live at 10:30 a.m. Monday and immediately crashed, according to officials at both Seamen’s Bank and Cape Cod 5. While small banks struggle with the system, trying to upload individual applications, large banks were allowed to upload 5,000 or more applications in a single spreadsheet. This raised fears that a “first-come first-served” program could turn out, once again, to be anything but fair.
“In the first round of PPP — the $349 billion — the big banks were hesitant to jump in at first,” said Lori Meads, CEO of Seamen’s Bank. “Now that they’re in it, I feel like, unfortunately, they’re pushing the smaller banks out. We could be fighting for scraps.
“These are supposed to be given out on a first-come first-served basis,” continued Meads. “When they’re first in line with 5,000 loans … it’s scary to me.”
The first round of PPP loans began in a chaotic rollout on April 3 and ended when the money ran out on April 16. The loans were meant to help maintain the payrolls of small businesses nationwide, and are especially enticing because the entire loan amount can be forgiven if certain conditions are met. PPP loans are structured to pay for eight weeks of payroll, plus some extra for rent, mortgage interest, and utilities.
Cape Cod 5, Seamen’s Bank, and the Cooperative Bank of Cape Cod all rushed to get these loans into the hands of their customers, said Robert Talerman, co-president of Cape Cod 5. “Our people were working crazy early in the morning until well after midnight, trying to get as much in as possible before the money ran out,” Talerman said. “We put through a little over 1,200 loans in the first round. That’s more than double the volume of commercial loans we would normally do in a year.”
Applications that were still being processed on April 16 had to be held back until Congress authorized the second round of funding. Seamen’s has more than 40 such applications ready for SBA approval, and Cape Cod 5 has several hundred. Each of those applications represents a local small business that needs help surviving this crisis.
The broken SBA website could stand in the way, however — and that’s not the only problem.
About 20 percent of the new $310 billion allocation was supposed to go to smaller businesses via smaller financial institutions — but those were defined as banks with less than $50 billion in assets. Cape Cod 5 has about $3.6 billion, said Talerman, and Seamen’s has $380 million.
“That’s ‘million’ with an M,” said Meads. “Fifty billion is still a huge bank.”
It’s not clear how big banks with thousands of applications will be treated. ABC and NBC both reported that the SBA has new “pacing” rules, under which lenders are theoretically allowed up to 350 applications per hour. The spreadsheets are supposed to be scored at that same “pace,” meaning a 7,000-application sheet would be accepted over the course of 20 hours.
That’s why small lenders are so worried about the broken website.
“We want to get this money to the people who need it,” said Meads. “They’re counting on us. In two to three days, the money could be gone.”
Update: After the April 30 edition of the Independent went to press, both Seamen’s Bank and Cape Cod 5 were able to move all of their existing loan applications through the SBA’s system and secure approvals. As of Thursday, April 30, both banks were accepting new applications for PPP loans from small businesses and independent contractors who have any kind of account at the bank. Neither Lori Meads at Seamen’s nor Robert Talerman at Cape Cod 5 ventured to guess how long this round of funding would last.