Dive Brief:
- The Small Business Administration (SBA) enlisted Amazon Web Services (AWS) to develop a new gateway for Paycheck Protection Program (PPP) loan applications that went live Wednesday morning, American Banker reported. The application processing platform E-Tran suffered a four-hour outage Monday, delaying banks' progress in getting millions of dollars in loans to small businesses.
- The Treasury Department issued loan applications for nonbank lenders, a move PPP architect Sen. Marco Rubio, R-FL, who posted the form on Twitter, had been anticipating all week. Until now, fintechs such as Kabbage, which reconfigured its business to handle SBA loans, had been left out of the process.
- Senate Democrats blocked Majority Leader Mitch McConnell’s attempt to pass a $250 billion infusion to the PPP that Treasury Secretary Steven Mnuchin suggested this week.
Dive Insight:
Chuck Schumer, D-NY, and Nancy Pelosi, D-CA, are seeking $100 billion for hospitals and $150 billion for state and local governments on top of the Republican plan for $250 billion. Additionally, they'd like half of the Republican-proposed $250 billion channeled through community-based financial institutions that serve companies owned by women, nonwhites, veterans and farmers.
"We need more funding and we need it fast," McConnell, R-KY, said on the Senate floor, according to Bloomberg. "The country cannot afford unnecessary wrangling or political maneuvering."
Sen. Ben Cardin, D-MD, called McConnell's plea for quick passage a "a political stunt," adding that the PPP hasn't run out of money and that the loan process needed to be streamlined.
The loan application portal that debuted Wednesday may help with streamlining. It gives non-SBA lenders direct access to E-Tran rather than requiring lenders to use an authorization number.
The SBA said the new gateway should prove "particularly useful" to lenders who had not made 7(a) loans before the coronavirus crisis, an agency official told American Banker.
Monday’s E-Tran outage prompted Rubio to urge in a tweet the platform’s woes "MUST be corrected ASAP." A follow-up tweet Wednesday from the senator, announcing the new portal, featured a crossed-fingers emoji.
Regulators, meanwhile, acknowledged lending through PPP doesn’t pose a risk for U.S. banks. The Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency said in a statement Thursday that they won’t make lenders maintain capital buffers as a protection against PPP loans.
A Fed lending facility would back those loans, and regulators agreed to "allow banking organizations to neutralize the regulatory capital effects of participating in the facility," according to the interagency interim final rule.
That could be welcome news for banks — the largest of which, JPMorgan Chase — temporarily stopped accepting applications for small-business loans outside PPP, the bank told the Financial Times on Wednesday. A spokeswoman said the bank would revisit taking non-PPP applications next week.
JPMorgan Chase’s consumer chief, Gordon Smith, told President Donald Trump on Tuesday, the bank has taken about 375,000 requests for $40 billion of loans since Friday, according to the Financial Times.
Meanwhile, another big bank's delay in joining accepting PPP applications appears to be over. Citi’s portal was up and running Thursday. The nation’s third-largest bank had been unable to accept applications as late as Wednesday.
