Three days after the start of a $349 billion federal loan program to help business owners survive COVID-19, the prediction that it would a challenge to immediately distribute money appears accurate.

In the Paycheck Protection Program, local banks are overseeing application submissions, making lending decisions and trying to funnel much-needed funds to business owners. Ron Samford, president and CEO of Metairie Bank, said by the end of Wednesday his bank will have processed more than 130 loan applications totaling $20 million. Another 100 applications are in the pipeline to submit to the U.S. Small Business Administration for approval, and he said “we are receiving new ones daily.”

None of the loans have yet been funded, he said, because of a lack of guidance from the SBA on what the terms should be and how the “forgiveness” aspect of the loan should be referenced in the loan documents.

“We hope to be able to begin funding by the end of the week and to ramp it up early next week,” said Samford, who added most Louisiana banks have not been able to distribute money yet, either.

The PPP is proving to be popular among businesses seeking help to stay afloat. It includes eight weeks of forgivable cash flow through 100% federally guaranteed loans to cover payroll, salaries, rent, utilities and other debt obligations.

The expectation was that a business owner can go to their lender, apply and get money in the same day. But many who began applying on April 3 are still waiting.

The SBA’s loan processing system stopped working Monday, making it impossible for loans to be approved and funds distributed, according to a trade group for community bankers and the CEO of an online lending marketplace. And there was confusion about the documents lenders needed from customers to complete loan transactions, they said.

“We are getting thousands of applications but many of our members can’t get into the SBA’s system or there are additional holdups,” said Paul Merski at the Independent Community Bankers of America.

SBA spokeswoman Carol Wilkerson said Tuesday afternoon that there have been more than 275,000 applications received for loans valued at $75 billion since the program launched. Treasury Secretary Steven Mnuchin had predicted last week that loans could be turned around and money transferred to businesses’ bank accounts the same day as applications were received.

But a large percentage of community banks — small banks that serve rural areas and small towns — have been unable to get logged into the system as well.

The delays aren’t a surprise to bankers. They didn’t receive final interim guidelines from the SBA until the evening before the application period began. As of Monday, the SBA was still tweaking the program.

Samford said the biggest hurdles his bank has faced include:

  1. Getting access to and learning to use the SBA’s E-tran system to process PPP loan applications.
  2. Getting guidance from the SBA on how the program is meant to work and understanding what the rules are for eligibility, determination of loan amount, conditions for obtaining “forgiveness,” etc.
  3. Training the bank’s workforce and educating applicants on those rules.
  4. Efficiently and successfully executing the program under “stay at home” orders and social distancing protocol.
    “We had to build new processes to receive, review, submit for approval and ultimately fund these loan applications, all on the fly, with many of our employees working from home and all of our locations closed to the public except for drive-thru lanes and visits by appointment only,” he said.

JEDCO president and CEO Jerry Bologna said he hasn’t heard of any local businesses that have received funding, but he has heard from those that are proceeding through the application process.

“I think we should start seeing funds flow pretty rapidly here, but we’re on the lookout for cases of local companies that have actually received loans,” he said.

Adding to the rush of applications was the fear that the $349 billion program could be capped, he said.

“I think we are seeing now that there is an appetite at the federal level to fund the program further,” Bologna said. “We are cautioning businesses to make sure they have all the facts and are taking advantage of the program that most benefits them.”

In addition to the PPP, businesses may access Economic Injury Disaster Loans and the Louisiana Loan Portfolio Guaranty Program. A breakdown of each is here.

The Associated Press contributed to this report.