April 30, 2020

Harris, Meeks Demand SBA Resolve Technical Difficulties Shutting Out Community Lenders from Accessing PPP Portal

Community Banks, MDIs, CDFIs Unable to Access SBA System in Race for PPP Funds

WASHINGTON, D.C. – U.S. Senator Kamala D. Harris (D-CA) and Representative Gregory W. Meeks (D-NY) on Thursday sent a letter today to the U.S. Small Business Administration (SBA) and the Treasury Department regarding widespread reports by small community banks, Community Development Financial Institutions and Minority Depository Institutions experiencing technical difficulties with SBA’s portal for PPP. Congress appropriated funding for these smaller lenders to distribute PPP so that truly small and local businesses could be better serviced.

The lawmakers contend that these technical difficulties, which have prevented many small lenders from access the SBA’s E-Tran platform to submit PPP applications, put local small businesses at risk of not being able to access the funds before they deplete, and are a continued example of how SBA has not prioritized small businesses and community lenders.

The lawmakers wrote, “We write to express our deep frustration with the technical difficulties that have effectively barred access for many community banks, minority depository institutions (MDIs), and community development financial institutions (CDFIs) from the relaunch of the Paycheck Protection Program (PPP). We request that you immediately inform us how you intend to fix the SBA systems to address these issues, and when we can expect reliable access to be created for these financial institutions, who reach the very communities and small businesses the PPP was intended to reach.”

A copy of the letter can be found here and below.

The Honorable Steven Mnuchin                                

Secretary                                                        

U.S. Department of the Treasury                  

1500 Pennsylvania Avenue, N.W.                 

Washington, D.C. 20220                                           

 

The Honorable Jovita Carranza

Administrator

U.S. Small Business Administration

409 3rd St. SW

Washington, D.C. 20416

 

Secretary Mnuchin and Administrator Carranza:

We write to express our deep frustration with the technical difficulties that have effectively barred access for many community banks, minority depository institutions (MDIs), and community development financial institutions (CDFIs) from the relaunch of the Paycheck Protection Program (PPP).  We request that you immediately inform us how you intend to fix the SBA systems to address these issues, and when we can expect reliable access to be created for these financial institutions, who reach the very communities and small businesses the PPP was intended to reach.

As you know, Congress expressly directed your agencies to create access for community banks, MDIs, and CDFIs in the passage of the Paycheck Protection Program and Health Care Enhancement Act. The Act provides for $60 billion of dedicated funding for the small business customers of these institutions.  This is the only way to ensure the availability of desperately needed credit for thousands of American small businesses served exclusively by these institutions. The much-anticipated April 27 relaunch of the PPP was plagued with technical difficulties.  Many smaller lenders have been completely frozen out of the E-Tran system or are able to log in briefly only to be kicked out.  With thousands of loan applications for small community businesses and minority businesses ready for submission, these smaller lenders have teams of staff dedicated to logging in repeatedly in a desperate attempt to help their customers before funds once again run out.  However, even after allocating staff towards this effort, many of these lenders were unable to access the SBA system to provide resources to communities most in need.

What’s more, in an unfortunate repeat of the complaints from the initial round of PPP funding, it appears that the largest lenders were able to access the SBA systems on behalf of their customers while smaller, community-based lenders were not.  Preferential treatment of the largest lenders is unacceptable and is inconsistent with the expressed intent of Congress in funding this program.  This system failure must be addressed immediately, as failing to do so harms the small businesses and communities impacted by the COVID-19 pandemic.  The Program is a critical component of Congress’s response and must not be allowed to fail.

We look forward to your timely response.

Sincerely,

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