The Small Business Administration is being inundated by loan applicants in need of assistance due to COVID-19. The SBA is scrambling to get loan payments out as soon as possible, but technical glitches are standing in the way.
The CARES (Coronavirus Aid, Relief and Economic Security) Act allocates $349 billion in loans backed by the Federal Reserve and guaranteed by the Small Business Administration, according to the Ionia Sentinel-Standard.
Business owners can apply for the loans through their bank or contact the SBA directly -- and therein lies the problem.
The SBA website cannot handle the amount of traffic it is receiving from loan applicants looking to access loans that do not require collateral and that, up to a certain amount, can be completely forgiven.
Many small community banks, like the Independent Community Bankers of America, are sending their customers directly to the SBA website. “It [the website] just completely shut down,” ICBA CEO Rebecca Romero Rainey told the Ionia Sentinel-Standard.
Small community banks that have no relationship with the SBA are having a tough time accessing the agency's system, and larger banks are trying to determine the extent of their relationship with the SBA pertaining to their portfolios.
Businesses can apply for loans up to $10 million with a 1% interest rate.
The Federal Reserve advised that they are in the process of creating another program to give banks billions of dollars in additional funding for more loans, reports the Ionia Sentinel-Standard.
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