Congress last month created the unprecedented program as part of a $2 trillion stimulus package to help businesses that have either shut down or have been dramatically curtailed by the coronavirus pandemic. Borrowers could apply for the loans via participating banks from Friday until June 30.
The program is being jointly administered by the U.S. Treasury Department and the Small Business Administration (SBA).
“Community bankers are frustrated with failed technology links and portals. Even those banks with access to the (SBA) system have shared their experiences of significant challenges with user access and latency in application processing,” the Independent Community Bankers of America (ICBA) wrote in a letter to the Treasury and SBA on Saturday evening.
The powerful lobby group, which represents thousands of small banks, added that lenders are “experiencing massive delays and (an) inability to process loans or even access the SBA.”
The Treasury and the SBA did not immediately respond to requests for comment on Sunday, although Treasury Secretary Steven Mnuchin has said the agencies are working hard to fix issues with the program.
“Funding of $349 billion is frankly inadequate for the magnitude of need in the American small business community and is likely to run out quickly,” the ICBA continued, warning that the largest U.S. lenders would quickly suck up the majority of funds, leaving community bank customers with nothing.
The group called for the government to allocate at least 25% of the existing and future funds for banks of $50 billion in assets or less, in line with their share of industry assets.
It also said the government should address an “urgent need for liquidity” by purchasing loans made through the program, allowing small banks to free up their balance sheets and continue lending.
“This program should not be limited by the balance sheet capacity of participating lenders,” the group added.