Banks are pressing the Treasury and small business associations to fix "systemic" shortcomings in small business loans

Banks are pressing the Treasury and small business associations to fix “systemic” shortcomings in small business loans

In the latest version of the popular software, the Small Business Administration worked with a contractor to develop an entirely new banking interface. While it appears to be operating more smoothly than before, Monday’s letter showed that lenders face a whole new set of technical problems.

The case concerns requests from companies that took out PPP loans last year and are now applying for a second round of aid, which was approved under the Economic Relief Act that was enacted in December.

Nichols said the Paycheck Protection app portal does not allow banks to place second drawdown loan applications if the company has previously applied for the first PPP loan and the request is still pending with SBA. It is a problem because the program rules do not require an exemption from the primary loan as a prerequisite for obtaining a second loan.

“This technical error is leading the SBA to not approve a large number of second drawdown loans,” Nichols said in the letter. “We urge SBA to fix this technical flaw and allow the lender to upload the borrower’s second PPP loan application regardless of the status of the exemption request from the borrower’s first drawdown loan.”

In the letter, Nichols said the bankers’ group was trying to report issues “which we believe are systemic and require immediate attention from your agencies to ensure that distressed small businesses have access to this important federal lifeline.”

He also cited concerns that lenders are receiving a large number of incorrect error messages when they support PPP loan applications through the SBA portal, including letters that state incorrect restrictions on loan amounts or that a PPP loan is required. The first is for a borrower under review when not.

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“Additionally, attempts to obtain clarification by the lenders have been met with silence by the lenders through the portal’s messaging system,” Nichols said.

SBA and Treasury spokespersons did not immediately respond to requests for comment.

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