The Small Business Administration (SBA) has processed $48.5 billion in the first 24 hours of the second round of the Paycheck Protection Program (PPP). The SBA lending platform has struggled to maintain pace of the demand and crashed during the early hours as banks and non-bank lenders rushed to submit the requests.
The PPP is part of the CARES Act, the economic bailout package for businesses that was signed into law a couple of weeks ago. The PPP allows smaller firms to obtain an interest rate free loan for 2 months of payroll. The loan is forgiven if the level of payroll is maintained. The first tranche of PPP was $349 billion but it proved highly popular so Congress went back to the printing press and added more money.
According to a report by the DailyCaller, by Tuesday afternoon approximately 450,000 loans from 5100 lenders had been processed. In a typical year, the SBA only processes a fraction of that amount.
SBA Administrator Jovita Carranza took to Twitter to comment on the demand noting the SBA system, ETran, has struggled to maintain pace.
Brock Blake, CEO of Fintech lender Lendio, reinforced that statement on Twitter.
Every lender is saying the same thing this morning. When they try to submit to Etran, it’s crashing. https://t.co/yhqQRrtQdV
— Brock Blake (@BrockBlake) April 27, 2020
Carranza also noted that $2 billion of loans from the first round, that were declined or returned, will be added to this round.
Unprecedented demand is slowing our system response times. Currently, there are double the number of users accessing the system compared to any previous day during the first round of #PaycheckProtectionProgram funding.
— Jovita Carranza, SBA (@SBAJovita) April 27, 2020
The SBA has posted additional information regarding PPP on a section of its website. All indications point to the ongoing demand for the PPP loans as smaller firms struggle to remain in business during a government-mandated shutdown. The US government is injecting an unprecedented amount of fiscal stimulus into the COVID-19 battered economy but even then, no one knows the final outcome as the world teeters on a recession.