As federal PPP program reopens, delays and confusion return

U.S. Sen. Jeanne Shaheen said New Hampshire banks deserve ‘kudos’ for their work in navigating the PPP process.

On Monday morning, Bedford-based Primary Bank had 200 applications for Payroll Protection Program loans all ready to submit when the second round of the federal small business relief program opened for business. All the bank had to do was submit the applications for approval by the U.S. Small Business Administration – a process that usually takes five minutes per loan.

However, by 3:40 that afternoon, the bank had only received 20 loan approvals because the SBA computer system crashed minutes after it went live at 10:30 a.m.

“I’m extremely frustrated,” Joe Bator, executive vice president at Primary said on Monday. “We get maybe a minute and a half online in the course of an hour. We’ve been doing this all day. We get a page through, then the system goes down. But we’re still trying. We’ll be trying though the night.”

Congress last week passed, and the president signed, another $310 billion for the PPP program, which had previously been funded for $349 million before it ran out of money on April 16, less than two weeks after it was launched. The new money was part of a $484 billion package that also replenished the Economic Injury Disaster Loan (EIDL) program with $60 billion.

Those seeking EIDL loans must directly apply via the SBA web portal, but that too is down. At deadline, it still said, “Notice: There is a Lapse of Funding” and that it was not accepting new applications and was still processing those in the queue. It is not clear if the delay was related to an earlier breach of the program through which the applications of 8,000 business owners were exposed to other businesses owners. But it could also be that with the existing backlog the extra $60 billion was already spoken for.

Who benefits?

The 1% percent, two-year PPP loans can be for as much as $20 million, and they are forgivable if at least three-quarters of the loan is spent on eight weeks of equivalent payroll and the rest on mortgage, rent, utilities or similar expenses.

The SBA has not revealed which companies are receiving the loans, as it routinely does for its other loan programs, opening itself up to criticism after more than 50 publicly held companies revealed in routine Securities and Exchange Commission filings that they had benefited.

Although the program was set up for businesses with under 500 employees and desperately in need of financing, many of the public companies took advantage of a loophole allowing chains to apply for each of their locations, and others grabbed the loans even though they had millions in the bank.

None of these companies, at least so far, is headquartered in New Hampshire, and only two have any presence in the Granite State. Zagg, which sells mobile device accessories, has a kiosk at the Mall of New Hampshire. The company, which had revenues of $522 million, took out a $9.4 million PPP loan. The Joint Company, a national chiropractic chain with a market capitalization of $160 million and offices in Salem and Nashua, got $2.7 million.

This second round of funding was supposed to fix some of the problems, said U.S. Sen. Jeanne Shaheen – one of the four senators who negotiated the small business provisions of the packages – in a webinar with the Business and Industry Association.

The administration has since clarified that the program was not made for large corporations that had another source of capital.

“Sadly we saw flaws in the program and the way it was implemented,” said Shaheen, a member of the Senate Small Business and Entrepreneurship Committee. “Some of the big businesses less in need were able to get in the queue first.”

Under this latest round of PPP funding, some $60 billion – less than a fifth of the $310 billion – was to be set aside, half for organizations like the NH Small Business Development Center to help those that don’t have relationships with banks, and the other half for smaller community banks, which rolled out the program last time in two weeks despite all its problems.

Shaheen: changes needed

New Hampshire banks – almost all of which are considered small by SBA standards – were able to process 11,682 PPP loans totaling $2 billion in less than two weeks.

Shaheen said they deserve “kudos” for being able to do so much in less then two weeks.

Primary Bank, one of those small banks, processed nearly 395 loans in the first PPP round. Only a handful languished when the funds dried up, but it didn’t take long before a new round of applications poured in, especially in the weekend after the package passed last Thursday.

Bator said he wasn’t sure how the billions set aside will work for small banks. He just hoped that the SBA would take into account his bank’s size when determining how to distribute the loans.

Another major flaw in the program, according to Shaheen, is that businesses have to spend their eight weeks on payroll before they might be ready to open back up and bring people back.

The senator said she tried to get more flexibility into the latest package but failed. However, one of her staffers, Robert Henson, said he was “cautiously optimistic” that there is a bipartisan consensus that Congress in the next package could allow forgiveness retroactively if the eight weeks were pushed out in the future.

Shaheen also said she would be in favor of requiring that the SBA reveal what companies were getting the loans.

“We been trying to get that data,” she said. “Unless we know where the money went, we can’t fix the problems.” She said she would push for that in oversight hearing as soon as Congress reconvenes.