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Despite system problems that have plagued the Paycheck Protection Program’s second round, almost 49,000 Massachusetts small businesses received loan approvals last week, exceeding the total from the first round of funding.
Lenders have processed loans totaling $4.36 billion through May 1 for Massachusetts small businesses in the second round, according to data released Sunday by the U.S. Small Business Administration. The second round of funding opened on Monday, April 27.
The initial PPP, which was supposed to last until June 30, ran out of funds in 13 days. Congress then approved a second round of funding for $310 billion.
The PPP’s second round last week saw an average loan size of about $89,000 for 48,768 Massachusetts small businesses. During the first round of funding, 46,937 Massachusetts businesses received about $10.36 billion, for an average loan size of more than $220,000.
The latest funding includes $60 billion reserved for smaller banks and community development financial institutions (CDFIs). While many banks prioritized their existing customers during the first round, some have opened the second round to other clients, including small business owners who had difficulties applying at their own institution and those with no banking relationships.
Community organizations have encouraged lenders to help small business owners of color, particularly those without limited resources for completing the loan applications. Several banks, including BayCoast Bank, Berkshire Bank and Eastern Bank, have partnered with the Foundation for Business Equity to help small business owners with the process.
Lenders managed the high loan volume despite difficulties accessing the SBA’s loan system at the outset of the second round. Many lenders had a backlog of applications from the first round or continued receiving applications while awaiting additional funding. Employees at many banks had to work past midnight to process loans last week.
The SBA identified the robotic processing automation (RPA) used by several lenders to enter data as a problem. RPAs were suspended on Tuesday of last week, and lenders reported some improvement using the system. Access to the SBA system was then limited late Wednesday to give lenders with total assets under $1 billion opportunities to get loans through the process before reopening access to all lenders Thursday morning.
Nationwide, the second round had loan approvals totaling more than 2.2 million through May 1 for $175.74 billion, over half the amount appropriated for the second round of funding. The average loan size was $87,000. During the first round, the average loan size nationwide was $206,000 for more than 1.6 million small businesses.
“We encourage all eligible lenders to participate and all eligible borrowers that need this assistance to work with an approved lender to apply,” SBA Administrator Jovita Carranza and Treasury Secretary Steven Mnuchin said in a joint statement on Sunday. “We are fully committed to ensuring that American workers and small businesses continue to get the resources they need to get through this challenging time.”
