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Texas reopening this week. Other states are waiting. Where the US stands on testing.

 Let’s just say it: The second launch of the Paycheck Protection Program didn’t go smoothly yesterday.

In fact, lenders and small business owners who had hoped the kinks had finally been worked out in the intervening weeks since PPP ran out of money, ended the day exasperated.

System-wide slowdowns left lenders taking to Twitter to vent frustrations. Small business owners who have been waiting weeks to get their applications approved, may still be in the queue after some small lenders failed to get even a few dozen applications uploaded. 

The Scene: Within minutes of the program launching, sources were sending screenshots of errors received by lenders trying to upload applications to the E-TRAN system. The system kept freezing. 

“It seems like the pace of this is slower than the last time around,” one industry source said. 

The numbers: The Small Business administration touted yesterday afternoon that it “processed more than 100,000 PPP loans” and those loans came from “more than 4,000 lenders.”

So what happened? By the end of the day, SBA argued “unprecedented demand” was responsible for glitches to the system lenders use to upload applications. The agency also noted that unlike the last time they launched PPP, this time they set a pacing mechanism in the system to ensure that no one lender – especially larger institutions– could enter thousands of applications within an hour and outpace smaller banks. What that meant was if a bank was trying to enter more than 350 applications within an hour, the system would time out. 

But even smaller banks said they were struggling to get in many applications at all. 

One source who represents community banks said they heard from bankers around the country who’d spent weeks getting their files ready for the relaunch only to be stalled at the start. 

Several industry sources pushed back that the pacing mechanism was the sole reason the system was unreliable. Instead, arguing the issue was that SBA’s system was simply not equipped to handle the volume despite multiple promises to congressional aides and industry that the system would be ready to go this time.

A reminder about SBA: It is worth repeating, SBA has never in the history of the agency lent the kind of money they are responsible for getting out the door right now.

It would normally take SBA years to lend the more than $660 billion they are kicking out right now. Aides on the hill hearing about frustrations from constituents and bankers are keenly aware of the fact that the system has not worked smoothly, but at the end of the day, the entire U.S. Senate present to vote for the program, did.

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