The CARES Act’s Paycheck Protection Program has been a critical lifeline for many businesses, saving numerous jobs — but how many, exactly?
That’s the question Washington Trust Bank is asking after flagging a concern with the Small Business Administration’s ETRAN system, which collects information about PPP applicants. Washington Trust Bank argues that the SBA data does not accurately reflect the number of jobs preserved by PPP money because the system for reporting a company’s employee count is confusing.
The Idaho Business Review connected with Washington Trust Bank’s Idaho Region President Andy Beitia to learn more about the issue.
Just to put this in perspective, how many PPP loans has Washington Trust made in Idaho? What’s the total funding and what’s the total number of jobs supported?
Washington Trust Bank originated 1,304 PPP loans in Idaho — totaling over $139 million. These loans supported 15,904 jobs in the state.
What is the situation you’ve encountered? Is it limited to Idaho or nationwide?
This is a nationwide problem. At the heart of the problem is the Small Business Administration’s E-TRAN system. This is the same system used by every financial institution to deliver PPP loans. In order to receive funds from the PPP program, applicants had to fill out an application and were asked to state the number of people employed at their organizations. Banks then entered the information into E-TRAN, which offered three fields in which to enter the existing number of employees: Existing, Created or Retained. With no guidance from the SBA on which was the correct field, we, like many financial institutions, determined “existing” was the most logical choice. The remaining fields were left blank. After the lists were released, we learned that the SBA pulled its data from the “retained” employees field to report the number of saved jobs from the PPP program. As a result, many loans processed by Washington Trust Bank, and a host of other lenders, appear to have retained zero jobs.
What makes this a problem?
It’s a problem because many good businesses that did the right thing have been made to look as though they didn’t. All of the businesses we work with used the money they received from the loan to pay their workforce and avoid or limit having to cut jobs due to the effects from COVID-19, which is the exact purpose the loans were intended for. Instead, they are being reported by the SBA for not having saved jobs, when that is not at all the reality. In other words, the SBA’s report has obscured the very real amount of good PPP loans that Washington Trust and several other banks have done. Thousands of saved jobs in the Boise area are going unreported by the SBA, which leads to confusion in the community regarding our purpose as lenders and partners to small business owners and shares misinformation with our elected officials who may then believe the SBA’s PPP program is not as effective as it truly is.
What other banks, credit unions, or other financial organizations have you talked to see whether they’ve had this problem? What sort of response did you get?
Doug Wolford, VP, SBA Manager at Washington Trust Bank and his SBA team are members of several organizations such as the National Association of Government Guaranteed Lenders (NAGGL) in which he has built relationships with his SBA counterparts at several banks across our markets. When he saw familiar names in the database that listed 0 jobs associated with their projects, he did reach out to his SBA counterparts and Banner Bank to let them know they were also on this list released by the SBA. Their conversation led them to understand that this problem is affecting many financial institutions across the nation.
Have you reported it to any organizations such as the Small Business Administration? What response did you get?
Yes, we have reported the problem to the SBA, our customers and local media to bring attention to this problem. In addition, this is a national issue as both the Washington Post and Bloomberg have reached out to us and other banks on this specific issue. We have not yet heard an official response or seen any action taken from the SBA. If you are a small business that has been reported as saving “zero” jobs from the PPP loan you received, I highly encourage you to reach out to Idaho’s SBA contact to report this error and urge them to take action to remedy this reporting problem.
How should this problem be fixed? What are you doing to make that happen?
We’re asking the SBA to repair this data reporting misrepresentation and to officially clarify that the error is in the E-TRAN system, not on the part of the borrowers, who did nothing wrong. On behalf of our customers and all borrowers who had erroneous data reported about them, we’re asking the SBA to clarify what each field in their E-TRAN system means and what it will be used for. Much of the problem could have been avoided if the SBA provided clear guidance on data entry and data reporting.
We’ve also volunteered to manually fix all of our 5,000+ loans, bank-wide, to ensure we input the employee number in the place the SBA will be reporting on. This is not an easy task, but we told the SBA we will do whatever it takes to remedy the situation.