Most of the Top SBA Lenders Aren’t Accepting Online Paycheck Protection Applications

The majority of top SBA small business lenders were not accepting new customer applications for the Paycheck Protection Program as of April 7.

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Most banks listed under the SBA's top 100 small business lenders by volume are either not accepting applications online for the Paycheck Protection Program or requiring a previous customer relationship.

In a sign of just how difficult it is for small businesses to access the nearly $350 billion in forgivable small business loans, only 17 of the top 100 Small Business Administration (SBA) lenders were offering online loan applications without explicitly requiring a prior customer relationship as of Tuesday morning.

The Paycheck Protection Program (PPP), which the U.S. Treasury Department and SBA announced would be available to millions of small businesses as of April 3, has had a delayed roll out as many banks cited a lack of clear direction from the federal government.

… only 17% [of the top 100 SBA lenders] were accepting applications online without explicitly stating that the borrower needed to have a previous customer relationship with the bank

And based on analysis of the websites of the top 100 lenders of SBA 7(a) loans — the most popular SBA loan prior to the coronavirus crisis — only 17% were accepting applications online without explicitly stating that the borrower needed to have a previous customer relationship with the bank. Those requirements suggest that gaining access to the funds —available on a first come, first served basis — is proving difficult.

The PPP fund is designed to incentivize primarily small businesses to keep employees on the payroll. The loans can be forgiven at the end of 8 weeks if the business uses at least 75% of the loan to keep employees paid at their current salaries.

In the first 24 hours, banks that did make loan applications available saw a flurry of demand for the PPP loans. But many banks did not immediately accept applications based on concerns over the cost of servicing those loans. That prompted the Federal Reserve to announce it would put in a backstop in order to facilitate more rapid issuing of the Paycheck Protection loans.

SBA lenders holding back

Based on review of the top 100 SBA lenders’ websites on April 7, many were not offering loans to new customers. And many more had suspended applications or withholding offering applications at all.

Of the top 100 lenders:

  • 17 were accepting new applications online without explicitly requiring a prior customer relationship
  • 5 were accepting new applications, but through email
  • 5 had suspended accepting applications.
  • 45 were not accepting applications at all currently either online or in another format
  • 23 were accepting or prioritizing applications from current customers

The full list of the lenders and their application acceptance status for the Paycheck Protection Program is available here

Of course, the situation is fluid and banks could move in the coming days — or even hours — to begin accepting applications for loans as the terms become clearer. Additionally, the list of the top SBA 7(a) lenders is a small number of banks — though many high-profile and large — compared with the number of approved banks and credit unions spread out across the country.

However, with more than half of the list of top 100 lenders not accepting applications online and from new customers, it shows that many small businesses will have a tough time immediately accessing the funds, which are considered a lifeline.

Many businesses may choose to apply for the previously announced coronavirus relief loans from the SBA. Some may look to local financial relief programs, which are being made available at the state and county level.

What’s clear is that small businesses should reach out to their local lending institutions to inquire if or when the Paycheck Protection Program will be available to them.

Editor’s Note: Neither Workest nor Zenefits is affiliated with, nor endorsing, the financial assistance programs listed in this article. This article is for informational purposes only. We cannot advise on how to apply for any of the programs listed. Readers should consult the programs directly with questions or concerns.

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