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Despite system problems that have plagued the Paycheck Protection Program’s second round, almost 30,000 Connecticut small businesses received loan approvals last week, 11,000 more than in the first round of funding.
Lenders have processed loans totaling $2.557 billion through May 1 for Connecticut small businesses in the second round, according to data released Sunday by the U.S. Small Business Administration. The second round of funding opened on Monday, April 27.
The initial PPP, which was supposed to last until June 30, ran out of funds in 13 days. Congress then approved a second round of funding for $310 billion.
The PPP’s second round last week saw an average loan size of $86,500 for 29,559 Connecticut small businesses. During the first round of funding, 18,435 Connecticut businesses received about $4.15 billion, for an average loan size of more than $225,000.
The latest funding includes $60 billion reserved for smaller banks and community development financial institutions (CDFIs). While many lenders prioritized their existing customers during the first round, some have opened the second round to other clients, including small business owners who had difficulties applying at their own institution and those with no banking relationships.
Lenders managed the high loan volume despite problems accessing the SBA’s loan system at the outset of the second round. Many banks and credit unions had a backlog of applications from the first round or continued receiving applications while awaiting additional funding. Employees at many institutions had to work past midnight to process loans last week.
The SBA identified the robotic processing automation (RPA) used by several lenders to enter data as a problem. RPAs were suspended on Tuesday of last week, and lenders reported some improvement using the system. Access to the SBA system was then limited late Wednesday to give lenders with total assets under $1 billion opportunities to get loans through the process before reopening access to all lenders Thursday morning.
Nationwide, the second round had loan approvals totaling more than 2.2 million through May 1 for $175.74 billion, over half the amount appropriated for the second round of funding. The average loan size was $87,000. During the first round, the average loan size nationwide was $206,000 for more than 1.6 million small businesses.
“We encourage all eligible lenders to participate and all eligible borrowers that need this assistance to work with an approved lender to apply,” SBA Administrator Jovita Carranza and Treasury Secretary Steven Mnuchin said in a joint statement on Sunday. “We are fully committed to ensuring that American workers and small businesses continue to get the resources they need to get through this challenging time.”
