The second round of the Paycheck Protection Program begins. Better to hurry


The Paycheck Protection Program, the U.S. government’s coronavirus relief fund for small businesses, took over billions of dollars in low-interest loans on Monday, but banks across the country reported a few problems along the way.

Rob Nichols, president of the American Banker Association, tweeted Monday afternoon that banks were having difficulty accessing the US Small Business Administration’s approval portal for the loan program. This, he said, would slow down the ability of banks to distribute aid to small businesses.

An SBA spokesperson told CBS MoneyWatch that there were no issues with their website or approval process. She said the SBA informed banks on Sunday night that it would limit the number of requests they can submit per hour, to allow all banks to access the program.

“The stimulus mechanism prevents a lender from submitting thousands of loans per hour into the ETran system,” the spokesperson said. “If a lender exceeds the stimulus limit, it will be expired.”

President Donald Trump on Friday signed the bill that authorizes additional funding of $ 310 billion for the program, which offers loans repayable at 1% interest for companies with up to 500 employees. It is above the 350 billion dollars who was loaned out in the first round of the program in just two weeks. Loans are repayable in full if companies use 75% of the money guaranteed by the federal government to pay and retain their employees.

But the rush to secure funds will likely cause the second round of funding to accelerate, experts said. Bank of America CEO Brian Moynihan said on CBS’s Face the Nation On Sunday, his bank had $ 50 billion in applications for the second round of PPP financing. JPMorgan Chase, the country’s largest bank, also said it has 150,000 apps ready to launch, with thousands more in the works.

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Government watchdogs and small business lawyers say that despite the changes to the second tranche of P3s, many problems and drawbacks with the program persist.

Last week, the Trump administration and Congress filled several loopholes that plagued the first round of the Small Business Relief Fund. These shortcomings have given major state-owned companies access to AutoNation’s popular paycheck protection program, Ruth’s Chris Steak House and Shake Shack Chains.

Jennifer Ahearn, policy director for Citizens for Responsibility and Ethics in Washington, said that while Congress has added more accountability to the second round of PPP, the program needs a lot more oversight and transparency to prevent abuse.

Timothy Davis, a lawyer who represents small businesses, said he received 10 calls just on Friday from business owners expressing concern that they could not keep workers on the payroll because businesses remain closed and some employees are unable to keep workers on the payroll. not looking to be rehired.

“I don’t see a lot of challenges that the first round had that are set in this second round” of PPP funding, Davis said. Requiring businesses to spend the money immediately, while the economy is still at a standstill, is the biggest problem for its customers.

“A lot of people who get money from the program are going to make it unused,” he predicted.

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