WASHINGTON: U.S. banks on Monday began another chaotic dash to grab US$310 billion in fresh small business aid released by the government, after it changed some of the rules of the first-come-first-served program at the 11th hour.
With the nation’s lenders already sitting on hundreds of thousands of backlogged applications, the fresh funds are expected to be burned through in days - leaving swaths of mom-and-pop enterprises out in the cold again, banking groups said. Created as part of a US$2.3 trillion congressional economic relief package, the program kicked off on April 3 with an initial US$349 billion in funding which was quickly exhausted in less than two weeks. The program allows small businesses hurt by the coronavirus to apply for government-guaranteed loans with participating banks. Those loans will be forgiven if they are used to cover payroll costs, subject to some conditions.
On Sunday, the SBA said it would try to mitigate that problem by announcing that banks could submit a minimum of 15,000 applications in a one-off bulk file, leaving smaller lenders to battle with the clunky E-Tran system. Around Monday lunchtime, the SBA said it would lower that threshold to 5,000 and imposed a deadline of Monday, 9 p.m. EDT.
In an email, the SBA said that changes to ensure loan submissions were fairly paced would result in some lenders being"timed out" if they tried to submit too many applications.
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