The U.S. Small Business Administration (SBA) has approved 400,000 more pandemic relief loans worth $35 billion, saying it is trying to repair operational problems in the program brought up by lenders, Reuters reported.
The SBA launched the newest round of the Paycheck Protection Program (PPP) earlier this month. However, the drastic changes to the rules, processes and technology platform have led to issues that ended up making the loan approvals slower, according to Reuters.
Small- to medium-sized businesses (SMBs) were running into issues trying to apply for the loans, according to the American Bankers Association, per Reuters. Lenders, in addition, received new levels of “incorrect error messages” after submitting loan applications.
According to the SBA, on Tuesday (Jan. 26), there were about 4.7 percent of first-time loans that had anomalies, including data mismatches and eligibility concerns, Reuters reported. The SBA said these anomalies will “require follow-up between the lender and the borrower so that borrowers can access a second round of loans,” and guidance would be offered.
The PPP was first passed last year shortly after the touched down on U.S. shores, offering businesses loans that could be repaid by the government if they were used on eligible expenses like employee payroll. The program ran into controversy though once it came out that several loans had gone to big publicly-traded companies.
The SBA rolled out its rules for the new round of PPP funding, which is worth $284.5 billion, PYMNTS reported.
The program will give loans up to $10 million for SMBs that have been devastated by the pandemic, with companies, nonprofits, sole proprietorships and entities that didn’t get the full amount last year eligible for it now. In addition, SMBs that did receive PPP loans last time can still be eligible for $2 million in loans.
If businesses spend at least 60 percent of the money on payroll within 24 weeks of getting the loans, they won’t have to pay the loans back.