Lenders offer behind-the-scenes look at who’s getting and giving PPP loans

Bay Area lenders and borrowers in the SBA Paycheck Protection Program shared their insights with me this week into how the second installment of the program is working — and how it is not.

The Treasury and SBA’s efforts to ensure more money flowed quickly into the hands of Main Street shopkeepers, restaurateurs and other small business owners appeared to be working, with the largest banks and their clients largely kept on the sidelines during the initial PPP lending this week.

A congressional carve-out of $30 billion for the nation’s smaller lenders, those with less than $10 billion in assets, allowed them to capture PPP dollars without having to compete with the nation’s largest lenders. That allocation was already used up by Tuesday afternoon.

On Wednesday, it looked likely that the nation’s largest banks would quickly sweep up the remaining PPP dollars as their automated submission of thousands of PPP applications kicked into overdrive. But the SBA temporarily shut off its loan portal to all but the smallest of PPP lenders for another few hours.

The move was designed “to ensure access to the PPP loan program for the smallest lenders and their small business customers,” the SBA said.

That was good news for clients of PPP lenders with less than $1 billion in assets. It was not such good news for the big banks, or their clients.

“We will utilize the window for small lenders as we continue to receive new applications,” Barbara Morrison, president of Oakland SBA lender TMC Financing, said Wednesday. “We have secured loan numbers totaling almost $100 million! The thank-you emails are heart warming to know what an impact these funds are having and heart breaking, at the same time, to hear the desperation from some business owners.”

Small lenders have been able to move quickly.

The new pacing practice also had larger SBA lenders guessing how many applications they could submit per hour before they were temporarily locked out of the agency’s electronic system.