At the kickoff of the program, lenders at first lacked guidance from the Trump administration on how to process applications and then ran into severe technical obstacles with an unstable SBA system used to approve the loans. It took until last week for banks to get guidelines on the documentation needed to disburse funds to borrowers. Self-employed individuals were able to apply for the loans in a second wave starting Friday, but banks didn’t have instructions on how to process their loans until this week.
“With the funding drying up, many if not the majority of sole proprietorships and independent contractors will not have the same access and opportunities as the first wave of those eligible to apply,” Bank of the West Corporate President Cynthia Blankenship said.
Some banks planned to continue taking applications as Congress figured out a way to restart the program. Bank lobbyists urged the SBA and Treasury Department to release guidance on how lenders should keep processing loans in the interim.
To banks on the front lines of the program, it was becoming clear that even another $250 billion would not be enough to meet the huge appetite for the loans, with hundreds of thousands of applications still pending.
“We think at the end of the day we’re going to need upwards of $1 trillion in order to satisfy the demand of America’s small businesses,” Consumer Bankers Association President and CEO Richard Hunt said Wednesday.