State bankers association requests wider paycheck protection program pipeline

Last updated on May 11th, 2020 at 11:28 am

The Wisconsin Bankers Association is calling on the U.S. Small Business Administration to grant SBA districts the authority to make local adjustments so that lenders have equal access to the SBA’s application portal.

Under the Coronavirus Aid, Relief and Economic Security ACT (CARES), only financial institutions approved by the SBA can grant businesses Paycheck Protection Program Loans, which businesses are applying for to keep staff on payroll during the coronavirus pandemic.

But in the current environment, financial institutions do not have equal access to the SBA’s application portal while others have lost business as a result, said Rose Oswald Poels, WBA president and chief executive officer.

“Overall, the SBA has done the best it can to implement a program that can help small businesses during this crisis,” Oswald Poels said. “But now is the time for the national SBA office to turn the reins over to the SBA districts. They need the authority to make the necessary local adjustments to allow every SBA-approved lender equal access to the portal.”

General access, as well as steps involving application approval codes, have slowed down accessibility for banks attempting to use the portal, Oswald Poels said in a statement. Oswald Poels, who offered her best estimate based on conversations, believes only 30% to 40% of Wisconsin Banks have the ability to process Paycheck Protection Program applications, she said.

“We are hearing from many bankers that they have the applications in hand,” Oswald Poels said. “They need access to the SBA portal to complete the final step in helping small businesses through this crisis.”

Some Wisconsin banks were already SBA-approved lenders, but since they haven’t used SBA’s application portal in years, they’re having to reset password credentials, which has created a logjam in Washington D.C. with similarly situated banks, Oswald Poels added.

“I think if they decentralized it to allow staff to manage that process, it would go faster,” Oswald Poels said. “In my opinion, that should have been done last week.”

In addition to the group of lenders who do not have access to SBA’s application portal, there’s also a group of lenders who do have access and have gotten approvals, but are stuck in a holding pattern because SBA is not providing any notes or documentation to allow lenders to close PPP loans.

“Right now, banks are being told, ‘Don’t close the loan because we haven’t told you what documents to use,’” Oswald Poels said.

However, there are some banks in Wisconsin and around the country that have chosen to close loans using their own notes due to the pressure to gets funds in the hands of business owners.

“I’m assuming those same banks are going to circle back with that group of borrowers and get correct documentation signed after the fact,” Oswald Poels said. “It’s also possible that SBA will issue guidance that grandfathers that group in, but I don’t have clarity on that yet.”

Waukesha State Bank began processing PPP loans on Friday morning and has since approved approximately 175 applications, said Ty Taylor, Waukesha State Bank president.

“We’re doing our best to make a big dent,” Taylor said. “At a high number, I think we’ve processed a third of our applications at this point, but it’s a lot of work.”

Some business owners are paralyzed by the prospect that there may only be limited funds through the PPP program. While Waukesha State Bank expects to disburse funds next week, approving as many applications now is important since funds through the PPP may dry up unless Congress chooses to allocate additional funds to the CARES Act.

“There’s an urgency to this because if the money is limited, every loan big or small is saving jobs in our community right now,” Taylor said. “Our thought is we need to help as many people right now and once we finish that, we’ll start disbursing.”

The application process has also been bogged down by incomplete applications, which tacks on extra time as lenders reach out to borrowers for clarification. Taylor recommends that business owners ensure they have a clean application and to even include an additional document demonstrating how the loan calculation was made, he added.

“An excel spreadsheet of how you’ve done your math would be a godsend,” Taylor said.

Click here to find local SBA lenders that are processing PPP applications. Click here to apply for the PPP.

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Brandon Anderegg
Brandon covers startups, technology, banking and finance. He previously worked as a general assignment and court reporter for The Freeman in Waukesha. Brandon graduated from UW-Milwaukee’s journalism, advertising and media studies program with an emphasis in journalism. He enjoys live music, playing guitar and loves to hacky sack.