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After system problems led to nationwide frustrations with the start of the second round of the Paycheck Protection Program, Massachusetts banks have seen improvements with the process.
“Today is better than yesterday, and yesterday was better than Monday, which was a fiasco,” said Joseph Baptista Jr., president and CEO of Taunton-based Mechanics Cooperative Bank.
When the second round of funding opened at 10:30 a.m. on April 27, banks across the U.S. had difficulty processing loans in the U.S. Small Business Administration’s system.
In a memo sent to lenders on Tuesday, the SBA identified an issue affecting E-Tran, its loan processing system.
The SBA said in the memo that banks using robotic processing automation (RPA) to submit information in E-Tran had burdened the SBA’s loan system and diminished the system’s capabilities. The SBA suspended the use of RPAs on Tuesday.
“Without RPAs, the loan processing system will be more reliable, accessible and equitable for all small businesses,” the SBA said in the memo.
Instead of RPAs, lenders can use application programming interface (API) to automate E-Tran submissions, the SBA said, adding that lenders could contact the agency for assistance in converting to non-RPA APIs.
The memo also said the SBA and Treasury were “working on ways to optimize the loan processing system.”
Carl Taber, executive vice president and chief lending officer of Swansea-based BayCoast Bank, said the bank started seeing improvements after receiving the memo early Tuesday afternoon. BayCoast staff had worked until 10 p.m. on Monday, hoping to enter more than 200 applications in E-Tran. Instead, fewer than 50 were processed that first day.
Haverhill-based Pentucket Bank said in a statement that staff members experienced problems processing loans and worked until almost 3 a.m. Tuesday to enter more than 100 applications.
Despite the improvements, Baptista said the SBA system still needs work.
“There have been improvements, but it’s still not where it needs to be,” Baptista said. “We’re able to slug through it and get loans improved.”
Several national bank and credit union trade associations – including the American Bankers Association, the Credit Union National Association, and the National Association of Federally-Insured Credit Unions – sent a letter to SBA Administrator Jovita Carranza about concerns with the loan submission process and the E-Tran system. The trade associations asked Carranza to share information about the system with the public to help manage small business owners’ expectations.
Guidelines around PPP loans, which launched April 3, also continued to be updated. The most recent SBA guidance said small businesses cannot delay receiving some of the loan proceeds as a way to put off the start of the eight-week time frame that will be used to consider whether the loan will be forgiven.
Lenders must disburse the funds within 10 calendar days of receiving a loan number from the SBA, the guidance said. If lenders do not have all necessary documentation, including the signed promissory note, it does not have to disburse the loan. But the loan is considered canceled if the proper paperwork is not received within 20 days, according to the SBA.
Taber said some small businesses, including restaurants, consider the eight-week period too short for becoming fully operational.
For those that do not meet the requirements to have the loan forgiven, Taber added, the small business owners have said that the two-year time period to repay the amounts not forgiven is too restrictive.
“I think the program needs some refinement,” Taber said.
