Trump officials briefly limit coronavirus loan applications to smallest lenders

Trump officials briefly limit coronavirus loan applications to smallest lenders
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The Small Business Administration (SBA) on Wednesday briefly closed applications for its popular emergency coronavirus loan program to all but some of the smallest U.S. lenders, infuriating a number of bank industry advocates.

The SBA limited access for eight hours, allowing only banks, credit unions and community financial institutions with $1 billion or less in assets to apply through the Paycheck Protection Program (PPP). The move was in effect between the hours of 4 p.m. and 11:59 p.m. EDT.

The system would reopen to all other approved financial firms after that time frame, which the Trump administration said was intended to “ensure special access to the PPP loan program for the smallest lenders and their small business customers.”

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“SBA is working to ensure that all eligible small businesses have access to this funding to sustain their businesses and keep their employees on payroll,” SBA Administrator Jovita Carranza and Treasury Secretary Steven MnuchinSteven Terner MnuchinWhy Trump can't make up his mind on China Five takeaways from PPP loan data On The Money: Trump administration releases PPP loan data | Congress gears up for battle over expiring unemployment benefits | McConnell opens door to direct payments in next coronavirus bill MORE said in a statement.

Created by the $2.2 trillion coronavirus relief bill signed by President TrumpDonald John TrumpKimberly Guilfoyle reports being asymptomatic and 'feeling really pretty good' after COVID-19 diagnosis Biden says he will rejoin WHO on his first day in office Lincoln Project offers list of GOP senators who 'protect' Trump in new ad MORE in March, the PPP provides forgivable loans to small businesses facing financial peril because of the coronavirus pandemic and the measures imposed to slow it. After distributing $349 billion in less than two weeks, the SBA began doling out a second round of $310 billion in funding on Monday.

A crush of applications then crashed the SBA’s filing system on Monday and locked out lenders across the U.S., but the agency began approving loans on Tuesday and Wednesday. Bank and credit union industry groups that implored the SBA to shore up its system noted signs of improvement as the agency appeared to overcome some early stumbles.

But the SBA’s Wednesday decision to carve out a window for smaller firms infuriated advocates for larger banks also seeking to serve small-business clients.

“With SBA blocking nearly 800 banks, relief for potentially thousands of small business owners and their employees will be delayed. A better solution would be a fully operational system that allows banks of all sizes to provide support to Main Street,” tweeted Kevin Fromer, president and CEO of the Financial Services Forum, a trade group that represents the eight largest U.S. banks. 

The Trump administration and Congress have each sought to gear more funding toward smaller lenders after more than two dozen large, publicly traded companies accepted a significant portion of the first round of PPP funding through larger banks.

Congress allocated $60 billion of the new $310 billion in funding to be distributed by smaller banks and lenders and the smaller businesses that they serve. That money ran out Tuesday, prompting the SBA to give access to firms who may have missed the boat.