March 1, 2021
Main Street Monday – SBA Adapts Their IT Systems to Provide COVID-19 Relief
Legislation in response to the COVID-19 pandemic has left the SBA scrambling to make changes to its E-Tran loan system and program portals. Unfortunately, some of these changes did not come fast enough. According to FedScoop, a number of small businesses have closed permanently due to the SBA’s struggles with processing PPP loan requests.
“We’ve been obviously faced with a tremendous scaling challenge in terms of the volume of transactions we are processing,” says Sanjay Gupta, chief technology officer at SBA. “But also more importantly the velocity at which we are processing this higher volume.”
In order to handle a higher volume of loan requests during the pandemic, the SBA nearly quadrupled its staff. Fortunately, the agency was already in the process of migrating to a cloud-based system prior to the pandemic which allowed it to scale with increased employees better than it would have otherwise. However, when the CARES Act passed the SBA shifted its focus from implementing a cloud-based system to program security. This shift meant that E-Tran and program portals gained a higher level of security and visibility at the expense of performance.
The SBA’s focus on automated security has left PPP plagued with processing delays. Since the program reopened on January 11, 2021, SBA lenders have been struggling to fix PPP loan error codes that were intended to prevent ineligible borrowers from getting loans. Instead, the automated system appears to have flagged between 20-30% of some lenders’ PPP portfolios with false error messages. Although the SBA’s IT team has been able to speed up the process of clearing these error codes, many borrowers have been left waiting over a week for a loan approval.
Looking to the future, Gupta says the SBA’s IT team plans on putting a newfound emphasis on improving their machine learning capabilities so that loan anomalies will be detected more accurately, which will help small businesses get approved faster.