CHICO, Calif. -- Small businesses are having trouble getting loans, but banks are having even more trouble with the high volume of loans they're receiving.
A lot of small business owners are taking advantage of the CARES Act. Specifically, the part that allows them to borrow roughly two and a half months of expenses through the Small Business Administration. The purpose of the loan is to avoid having to lay off staff.
Community banks, like the Golden Valley Bank in Chico, are trying to process those applications but the volume has been overwhelming.
Golden Valley Bank President and CEO Mark Francis says the CARES Act was flawed from the beginning.
“The SBA cannot handle the volume of loans coming in. It has improved over the past couple days. We've been able to get loans funded for small business folks, but we still have a huge pipeline and it's going to take a while to get through it.”
Francis says his bank has received hundreds of inquiries within the last week.
It's especially tough since some banks aren't accepting loan applications. This causes an extra workload for those that are.
To put into scale the workload the SBA is tasked with, they process between 25 to 50 billion dollars in loans on a normal year.
Right now, they're trying to process 350 billion dollars within a week.
Francis believes banks could potentially start to see the logjam clear up by the end of the month.