The Small Business Administration on Wednesday afternoon temporarily halted Paycheck Protection Program loan applications for all but the very smallest lenders.
For an eight-hour period that began at 4 p.m. Wednesday, access to the PPP application portal was available only to lenders with assets of less than $1 billion. Access for larger institutions will resume at midnight.
“In addition to ensuring access for the smallest lenders, we expect that providing this reserved processing time today will enhance the SBA’s loan system performance for all users who submit loans outside of this time frame,” U.S. Treasury Secretary Steven Mnuchin and Small Business Administrator Jovita Carranza said in a statement issued Wednesday.
The PPP is a federally backed program that offers forgivable loans to help small businesses weather the economic disruptions caused by the COVID-19 pandemic. Demand for the program has been huge, and lenders have reported difficulties accessing the SBA’s application portal because so many users are trying to access it at once.
Borrowers must apply through a financial institution, and there’s a sense of urgency to get applications approved before funding runs out.
The program relaunched Monday morning with $310 billion in federal funding after running through its initial $349 billion in 13 days. Observers say round-two funding could run out even quicker.
Most U.S. banks are small institutions. According to The Federal Deposit Insurance Corp., at the end of last year 4,381 of the nation’s 5,177 FDIC-insured institutions had assets of $1 billion or less. On the other end of the scale, only 10 institutions had assets of more than $250 billion.