U.S. Donald Trump, left, listens as Steven Mnuchin, U.S. Treasury secretary, speaks during a Coronavirus Task Force news conference at the White House in Washington, D.C., on Thursday, April 2, 2020.
Kevin Dietsch | UPI | Bloomberg via Getty Images
Treasury and the Small Business Administration said Wednesday that they will temporarily shut out big banks from the electronic loan portal used to submit applications for the government’s small business relief program.
The move applies to any lender with more than $1 billion in assets for an eight-hour time period starting 4 p.m. today, according to an email obtained by CNBC.
The agencies want to “to ensure access to the PPP loan program for the smallest lenders,” according to the email.
“SBA and Treasury will evaluate whether to create a similar reserved time again in the future,” the agencies said.
The Paycheck Protection Program, a major component of the administrations’ response to the coronavirus pandemic, is in its second round after its initial $350 billion funding was quickly depleted. The SBA’s E-Tran system, which is the online portal lenders enter application information into to obtain a loan number prior to disbursing funds to the borrower, has been plagued with issues in both rounds of funding.
After banks complained that E-Tran has been unreliable and difficult to use, regulators said they would constrain access to it to help the overall program function. The program has also been criticized as favoring largest customers of banks, like publicly traded companies and big restaurant chains, over small mom and pop businesses.
Now, the U.S. agencies appear to be experimenting with reserving blocks of time for smaller banks, blocking access to big lenders in an attempt to improve the odds that small customers can have their loans approved.
Treasury Secretary Steven Mnuchin and Small Business Administrator Jovita Carranza said Wednesday in a statement that “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.”