More than 100,000 US companies They got emergency loans on the first day, but the problems continue

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US government will support small businesses 8:04

(CNN) - Exasperation. That's what lenders and small business owners went through on Monday, hoping that problems with the government's small business loan program would finally be resolved. This was not the case: widespread falls across the system sparked a wave of complaints.

Business owners who have waited for weeks for Check Payment Protection Program (PPP) loans - originally designed to ensure employers could keep their workers on payroll during closings caused by the coronavirus - may still be in line for a new round of $ 310 billion in cash, after some small lenders were unable to even load a few dozen applications into the system.

• READ: What is in the new financial aid law for small businesses amid the coronavirus crisis?

Just minutes from the program's relaunch on Monday, people began sending screenshots of the errors that appeared when lenders tried to upload applications online.

"It seems the pace of this is slower than last time," said an industry source.

The pain on Monday was acute because the grim reality of the program, which works on a first-come, first-served basis, has settled: not all companies that need a loan will obtain it.

"I don't know what will be done," said another industry source who works with business owners. “The demand is through the roof. There is an understanding that there are not enough loans for everyone, "he added.

Capitol lawmakers and aides have said the problems represent the price of acting quickly, because businesses are in dire need.

But Treasury Secretary Steven Mnuchin promised tighter oversight on how loans are distributed Tuesday, following new revelations about big companies that have raised the money in the first round, including the Los Angeles Lakers.

"I never expected in a million years that the Los Angeles Lakers ... I'm a huge fan of it, but I'm not a fan of the fact that they took out a $ 4.6 million loan. I think that is outrageous and I am glad that he was returned or would have had to be held responsible, ”Mnuchin said during an appearance on CNBC.

The secretary said the Federal Small Business Agency (SBA) will begin reviewing any loan above $ 2 million before it is forgiven. "So we will make sure that the taxpayers' intention is fulfilled here," he said.

Mnuchin later described that review as a "full audit of every loan over $ 2 million," noting that the condition "was very clear in saying that if people had other sources of liquidity they would not be able to take this loan."

Mnuchin added that it was "unfortunate" that a "small number of companies," including Ruth's Shake Shack and Chris Steak House, "have created a lot of publicity."

"I think it was inappropriate for most of these companies to take out the loans. It was clear there was a certification, "he said, noting that the companies that have returned those loans" encourage "the Treasury Department.

• LOOK: Shake Shack repays $ 10 million emergency loan to the US government

The numbers

The SBA reported Monday afternoon that it had successfully processed more than 100,000 loans from more than 4,000 lenders.

The agency explained that the "unprecedented lawsuit" was responsible for the flaws in the system that lenders must use to load applications. The SBA also noted that, unlike the first round of loans, this time it established a moderation mechanism in the system to ensure that no lender - especially the largest institutions - could enter thousands of applications and affect the smallest banks. Conversely, if a bank tried to enter more than 350 requests in one hour, the system would expire.

However, the smaller banks said they had trouble entering many requests.

A source representing community banks said he heard from bankers across the country that they had spent weeks preparing their files for the relaunch only to be stuck at first.

Multiple industry sources rejected the idea that the moderation mechanism was the only reason the system was unreliable. Rather, they argued that the problem was that the SBA system was simply not equipped to handle volume, despite multiple promises to Congress and the industry that the system would be ready to go this time.

Now the scale and speed of distribution is an issue. The SBA has never in its history loaned the amount of money it is responsible for distributing at this time. It would normally take years for the agency to lend the more than $ 660 billion it is currently giving.

Last minute changes to the program

The sources also pointed out that, once again, the problems with the process on Monday were due in part to the lack of clarity from the Treasury Department and the SBA about what the relaunch would be like.

Only until this Sunday afternoon did lenders know that the system would have an hourly operating rate. That day, they also learned that the SBA would allow bankers with 15,000 or more applications to file en masse. Even after the guide was announced, the SBA updated it again on Monday to report that it had lowered the limit on mass requests to 5,000.

• READ: What Small Businesses Need to Know About the Government's New Forgivable Loan Program

So banks were forced to decide whether it would be faster to attempt to upload applications on their own or pass them on to the SBA for mass processing. According to sources, few banks ended up turning in their massive requests for fear that it would take the SBA weeks to process them, leaving their clients in line after the money runs out.

Community bankers argued that the massive solicitation options put them at a disadvantage. Assistants to Congress and people involved in the program have struggled throughout the process to gain clarity on who qualifies for loans and what the banks' responsibilities are when it comes to the requirements of knowing their clients.

Only until numerous high-profile companies - and in some cases listed companies - admitted receiving the emergency loans did the Treasury Department step in to remind companies that they should only apply if they are in dire need.

What to Expect Now

President Donald Trump will speak at the White House : The president is expected to address the loan program, in the company of small business owners, on Tuesday afternoon. Undoubtedly, Trump has seen some of the frustrations with the program, but so far there have been no major changes to how it works or who is eligible.

Will bankers be able to load applications more quickly this Tuesday? The slowdown could mean that it takes longer for money to run out than anticipated. But, if the first round was a signal, delays in the application process were resolved as the week wore on.

Who receives the money this time? This Monday, the Lakers joined the list of high-profile companies that obtained - and returned - loans. The Treasury Department has tried to issue urgent warnings for companies to only apply if they are in dire need. During the first round, companies may not have been aware of the public scrutiny they would face. This time, it's worth keeping a close eye on who gets the money.

Congress will return: Senate Majority Leader Mitch McConnell and Democratic House leaders announced Monday that Congress will return next week. They are already beginning to compete for how lawmakers are going to fill their time once they return. Democrats can be expected to want to start investigating programs like the SBA, according to Senate minority leader Chuck Schumer, who issued this warning on Monday.

Now that Leader McConnell has decided that the Senate will reconvene next week, he must direct the chairs of his committees to immediately begin vigorous and desperately needed oversight of the Trump administration's response to the covid pandemic- 19 and its implementation of the CARES Act, ”wrote Schumer. "There should be public hearings in the Senate, at a minimum, to examine why the United States still lacks adequate evidence and why some lenders in the SBA's Check Payment Protection Program have prioritized the requests of their largest clients and richer to the detriment of smaller companies that have often suffered greater difficulties, "he added.

CNN's Betsy Klein contributed to this report.

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