Computer problems block loan requests

Arkansas bankers were frustrated all day Monday by technology glitches that prevented them from helping the 13,000 small businesses in the state lined up to apply for $310 billion in federal emergency aid.

The online loan portal accepting loan applications crashed within an hour of opening Monday, state bankers said. They added that the U.S. Small Business Administration’s portal, known as E-Tran, was clogged throughout the day and only a handful of loans went through.

It was an “extremely frustrating” day, said Davy Carter, regional president for Centennial Bank. “The SBA system has not functioned properly since it opened this morning.”

Bankers across the nation reported similar system failures: inability to access E-Tran, or the portal freezing up in the middle of a submission. Lenders also reported that processing was slow when they were able to access the portal.

“The SBA system continues to be plagued by issues that are greatly impacting banks’ ability to enter loans into the system,” Lorrie Trogden, president and chief executive officer of the Arkansas Bankers Association, said Monday.

The association, which represents banks statewide, conducted a survey last week that revealed 13,000 small businesses in Arkansas had applications ready to submit for SBA approval, with loans totaling more than $1 billion.

Arkansas bankers, Trogden said, were stumped by technological issues in submitting the loan requests Monday. The E-Tran portal — the gateway for lenders to submit loan requests on behalf of their small business clients — was “running extremely slow or in some instances freezing in the middle of inputting applications,” she said.

U.S. small businesses are wrestling for access to more than $310 billion in loans that Congress made available last week, replenishing the original $349 billion fund that was depleted in 13 days.

Small business owners are targeting the Paycheck Protection

Program, which was set up in March to cover payroll and other essential business expenses for companies struggling with the deteriorating economic conditions created by the coronavirus pandemic.

Businesses can borrow up to $10 million, with eight weeks of the loan forgivable if the money is used to retain employees.

There was “unprecedented demand” for SBA loans Monday, and the volume of requests slowed down E-Tran’s response times, said Edward Haddock, head of SBA operations in Arkansas.

“Currently, there are double the number of users accessing the system compared to any day during the initial round of PPP,” Haddock said Monday afternoon. “SBA is actively working to ensure system security and integrity while loan processing continues.”

Late Monday afternoon, it appeared that few of the 13,000 small businesses in Arkansas seeking financial support had their loan requests go through.

“The handful of lenders that I have spoken with this afternoon can count on one hand the number of loans they have been able to process today,” Trogden said, noting that the association’s members were planning to work evening shifts to continue trying to submit the loans.

Nationally, SBA processed more than 100,000 paycheck protection loans from more than 4,000 lenders Monday, Haddock said.

Loans are being processed “on a first-come, first-serve basis so that every small business has access to PPP loans to sustain their business and retain their employees,” Haddock added.

Sam Walls, president and COO of Arkansas Capital Corp., said the SBA system probably just wasn’t built to handle such heavy traffic.

“My guess, and it is just a guess on my part, is that so many more entities are now approved to access the system, and you had a number of lenders, [us] included, who had already underwritten PPP loans and were prepared to enter them into the system once it opened,” Walls said. “The result has been it is overwhelming the capacity of the system.”

Nevertheless, bankers in Arkansas kept plugging away to enter their customers’ loans.

“The system has been up and down all day long,” said Jason Kincy, marketing director of Arvest Bank. ”We are able to submit applications intermittently, so it is taking a while.

“Regardless,” he added, “we are working continually to get applications submitted, and our plan is to keep working around the clock.”

Walls of Arkansas Capital said SBA has offered tips to help navigate the system.

“We have seen information from SBA acknowledging the issue and offering tips on how to mitigate the problem, and we are exploring those,” he said.

Centennial Bank has said about one-third of its 1,900 employees have been dedicated to processing SBA loans.

“Our staff was, and is, properly positioned to meet the needs of our customers, but we are only one part of the process,” Carter said. “Obviously none of that matters if the SBA system doesn’t work.”

In the first round of SBA funding, which was exhausted April 16, more than 1.7 million small business loans were made nationwide, including more than 21,700 loans in Arkansas valued at $2.7 billion.

This new funding round that began Monday should help Arkansas lenders and small businesses because it provides a minimum of $30 billion for institutions and banks with less than $10 billion in assets, one banking executive said.

“This should allow a more equitable distribution of the [paycheck protection] fund,” said Chris Padgett, executive director of the Arkansas Community Bankers organization.

The first round of funding was criticized for allowing larger operations to borrow money at the expense of smaller companies.

Ruth’s Chris Steak House and Shake Shack received funding; both companies have announced they will return the money. The Los Angeles Lakers franchise of the National Basketball Association reported Monday that it also would return a $4.6 million PPP loan.

Under the program, any business or nonprofit with fewer than 500 employees that was operating by Feb. 15 is eligible to apply for support if its operations have been disrupted by covid-19.