The Small Business Administration (SBA) didn't learn much from its failings in the first round of small business loans under the Paycheck Protection Program in the CARES Act coronavirus stimulus response. The SBA was completely overwhelmed Monday morning with applications for the second tranche of funding, which was passed last week.
Within four minutes of its relaunch, Bloomberg reports the system was down. That's despite informing lenders on Sunday that it "would pace the rate of applications into its E-Tran system, meaning that all lenders should be able to submit at the same rate." The pacing system was supposed to keep any single bank from submitting huge bunches of loans—sometimes numbering in the thousands—all at once. That's a big headache for today. After today the headache is going to be that the money is tapped out again, because this round's $310 billion is going to go fast.
There are still loans from last time that are waiting to be processed. Bloomberg reports that "large banks including Wells Fargo & Co. and Bank of America Corp. have been preparing to submit a barrage of hundreds of thousands of loan applications that weren't process [sic] from the first round or have accepted since then." Which gives Democrats another bargaining point for the next round.
The SBA says it's going to cap loans from each bank in this tranche at $60 billion to keep the huge banks from gobbling it all up. After the public shaming of Ruth's Chris Steak House, Shake Shack, and the Lakers, (yes, those Lakers) some very big businesses might take a back seat and not go for the money, not wanting the public scrutiny. That hopefully will mean that the real small businesses get a shot at it, but that's not a given.
Which means to truly protect all the workers out there, which even Republicans say they want to, more money should be going directly into people's pockets—a lot more money. That money should go to cities and counties, too, so they can pay all the public workers who are keeping us safe and keeping the water running and the lights on. Pretty soon Republicans are going to start demanding more money for businesses, and that's when Speaker of the House Nancy Pelosi and Sen. Chuck Schumer really have to start playing hardball.
