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Bank of America sent in 184,000 applications for small-business stimulus loans after the second round of stimulus funding replenished the troubled federal program’s coffers.
But it is unable to give out the funds to small businesses because the Small Business Administration has yet to process the applications, according to a bank memo sent to employees Tuesday afternoon.
It’s the latest indication that the SBA, which was plagued by technical errors in the first round of loan processing, is still struggling to deal with the flood of demand for the mammoth stimulus program.
The loan program, known as the Paycheck Protection Program, offers small businesses forgivable loans to help them pay employees’ salaries and other bills during the coronavirus pandemic. The program, which opened in April, quickly exhausted $349 billion in initial funding and was replenished with $310 billion more last week.
From Sunday through Monday morning, Charlotte-based Bank of America sent in 184,000 applications en masse to the government and currently has 48,000 more it’s submitting through a slower manual process, according to a memo from Dean Athanasia, the bank’s president of consumer and small business, obtained by the Observer. So far, the bank has only received 1,000 approvals, but the bank didn’t specify if the approvals were from the large batch or the manual submissions.
“We are now waiting for them to process and approve these loans,” he said in the memo. Issues with the way that the SBA processes large swaths of loans have complicated banks’ efforts to get the second round of PPP funds to small businesses.
So far in the second round of funding, which started Monday, the SBA granted about 450,000 loans worth $48.5 billion, according to a report from The Daily Caller. The SBA did not immediately reply to a request for comment.
“Once the SBA approves the loans we have submitted to them, and are trying to submit through their manual process, hundreds of thousands of small businesses in America will be getting the help that the Congress and Treasury Department intended when they created this program,” Athanasia said.
Bank of America, one of the country’s biggest small-business lenders, was one of the first banks to accept PPP applications, but it has also been dogged by accusations of shuffling the order in which it submitted the program’s loans to earn the bank more in fees. The bank rejects the allegations.
CEO Brian Moynihan criticized the scarcity built in to the program in a Sunday interview on “Face the Nation,” arguing, “we need to take away the first-come, first-served aspect of this to make sure it’s fully funded, because at the end of day it’s going to where people want it.”
Many small businesses were left in the lurch after the loan program ran of out of funds, with many unable to get their applications submitted simply due to what bank they had.
So far, Bank of America has processed 239,000 PPP loans, three-quarters of which were for companies with fewer than 10 employees, according to the memo. Wells Fargo, which has faced its own unique issues with the stimulus program, declined to comment on its progress in the second round of funding. Charlotte-based Truist, the merged name of BB&T and SunTrust, processed 32,000 loans worth about $10 billion in the first round of PPP funding.