The Payment Protection Program (PPP) reopened for applications on Monday morning, but due to the volume of applications, the system crashed within minutes. According to The Hill, when the electronic filing system for the PPP was reactivated to accept new applications, more than a week's worth of queued applications flooded in, and the system crashed.
The Payment Protection Program is a loan program run by the Small Business Administration (SBA) that provides emergency funding to small businesses that have been forced to close by the coronavirus pandemic. Its goal is to ensure that businesses can continue to pay their employees for the duration of their closure.
Last week, NBC News reported that Congress passed a bill to provide additional funding to the PPP because the initial funding ran out within two weeks of the program opening. The new legislation allocated an additional $310 billion to for the Payment Protection Program so that the Small Business Administration could approve more loans to small businesses around the country.
Per The Hill, one of the reasons that the first round of funding for the PPP ran out so quickly is because a large chunk of the money went to large businesses rather than the small businesses the program was intended to assist. The legislation that approved the second round of funding for the programs imposed limitations on which businesses could receive the funding to ensure that the loans would actually go to small businesses. The Trump administration also discouraged larger businesses from applying for the second round of PPP loans, even if they technically still qualify under the new rules of the program.
The fact that backlogged applications were so numerous that the SBA's electronic system crashed on the first day the program reopened has many concerned that the second round of funding will run out as quickly as the first, The Hill reported. As businesses around the country remain closed, the demand for loans from the PPP is enormous, and the SBA's systems aren't up to the task of processing so many loans.
According to Politico, the electronic filing system also crashed when applications flooded in during the first round of loan processing. Per The Hill, in 2019 the SBA only processed about $28 billion in loans for small businesses. That's about 4 percent of the volume it's dealing with for the Payment Protection Program alone.
Experts in the banking industry have estimated that approving all the applications for the PPP loan program could cost up to $1 trillion, The Hill reported, but only $659 billion has been allocated to the program thus far.