“How shall we do it?” Said Jacokes. “For most of these people, they have to set everything up. They have to train their people. It’s not about turning the lights on. People have to know what to do.”
The timing, she said, ran the risk of penalizing underserved borrowers if they did not have enough time to offer the loans as the SBA gave them an exclusive time frame. The banks are some of the smallest in the country, and Congress has allocated $ 15 billion to provide loans. Lender representatives said they didn’t find out about Monday’s launch date until Friday morning.
The alarm from small lenders was the most recent complication in the SBA’s implementation of the paycheck protection program. When the PPP opened in April, it suffered from incomplete guidelines and technical malfunctions as the agency tried to launch an unprecedented emergency rescue.
The new iteration reflected the lessons congressional and administrative officials had learned – particularly a focus on hard-hit businesses in distressed communities – but lenders were nonetheless restless as the SBA and Treasury tried to make another quick turnaround.
An SBA spokesman declined to comment. On Friday morning, the agency said it would be giving community-facing lenders exclusive access to the PPP for much of the next week. Large banks expected that they would not be able to offer PPP loans until the week of January 18.
Because of the timing, small banks felt like test subjects for a revamped program that revamped the rules for creditworthiness and a new technical interface for receiving loan applications. Representatives of large and small lenders said Friday that they are still learning important details of SBA’s new loan processing system.
“I understand the desire to get this out as soon as possible, but I fear that if we have no idea what the application looks like, we will have a serious problem,” said Robert James II, chairman of the National Bankers Association who represents minority banks. “I’m afraid we will be a kind of laboratory rat and not really be able to functionally help our customers.”
James said his own bank in Savannah, Georgia had 13 full-time employees, including cashiers. More than 80 percent of nearly $ 9 million in PPP loans last year went to black companies, he said. Many of the bank’s borrowers take time to gather records and “not have a CPA on the speed dial,” he added.
“It’s not necessarily an advantage to go fast,” said James. “There is an advantage when we have a portal that is dedicated to us and the time we need.”
The Community Development Bankers Association, the group that requested more time, represents what are known as community development financial institutions serving low and middle income areas. Jacokes said the largest of them has about 1,000 employees, but some of them have 30-40 people.
“Any additional time can help,” said Jacokes. “You can’t get anything out on Friday night and expect people to be ready on Monday morning.”