WASHINGTON (Reuters) – U.S. banks on Monday began another chaotic dash to grab $310 billion in fresh small business aid released by the government, after it changed some of the rules of the first-come-first-served program at the 11th hour.

The Small Business Administration (SBA) reopened its Paycheck Protection Program at 10:30 a.m. EDT (1430 GMT), allowing lenders to resume processing applications from businesses hurt by the novel coronavirus shutdown.

Several bankers reported experiencing technology problems only minutes into the SBA reopening its loan processing portal, “E-Tran,” which was not designed to handle such huge volumes of traffic.

“So ETRAN lasted a whole 2 minutes before crashing. … It’s going to be a long 48 hours,” tweeted Alec Downing with First Farmers Bank & Trust in Indiana.

With the nation’s lenders already sitting on hundreds of thousands of backlogged applications, the fresh funds are expected to be burned through in days – leaving swaths of mom-and-pop enterprises out in the cold again, banking groups said.

Bank of America, for example, reported receiving 279,000 applications in the first five days of the program launching, of which it processed at most 15%, based on a Reuters analysis of SBA disclosures. JP Morgan, the top lender in the first round, said it had 300,000 loans “in some stage of the application process” of which it had processed 10% by the time the first round of funds ran out.

“Everyone pretty much has applications ready to go. It should be a week or so before the money is eaten through,” said Paul Merski, an executive vice president at the Independent Community Bankers of America.

He added it would be “very challenging” for anyone who has not already applied for a loan to successfully do so this week.

Created as part of a $2.3 trillion congressional economic relief package, the program kicked off on April 3 with an initial $349 billion in funding which was quickly exhausted in less than two weeks. The program allows small businesses hurt by the coronavirus to apply for government-guaranteed loans with participating banks. Those loans will be forgiven if they are used to cover payroll costs, subject to some conditions.

Given the pent-up demand, banking groups on Sunday said they were worried that the flood of new applications would strain the SBA’s loan processing system, which ground to a halt several times during the first round, bankers said at the time.

“Everybody is going to go through the same one-inch pipeline,” said Richard Hunt, chief executive of the Consumer Bankers Association. “It’ll be every bank for themselves.”

On Sunday, the SBA said it would try to mitigate that problem by announcing that banks could submit a minimum of 15,000 applications in a one-off bulk file, leaving smaller lenders to battle with the clunky E-Tran system. Around Monday lunchtime, the SBA said it would lower that threshold to 5,000 and imposed a deadline of Monday, 9 p.m. EDT.

“This site can’t be reached,” however, was the message several bankers said they saw when trying to access the system, leading several to warn over unequal access to the program.

“Fix the system or take everyone off of it to ensure #equitableaccess for all!” tweeted Brad Bolton, chief executive of Community Spirit Bank in Alabama.

In an email, the SBA said that changes to ensure loan submissions were fairly paced would result in some lenders being “timed out” if they tried to submit too many applications.

Amid the rush to get funds out the door, the first round of the program was also hobbled by technology and paperwork issues.

It has also come under scrutiny after some banks channeled money to their larger, more profitable clients, including hedge funds and public companies. [L2N2CC2LM] [L2N2CC12D]

The SBA and the U.S. Treasury appeared to try to address that issue on Sunday by imposing a $60 billion cap on the amount of funds a lender can process under the program, although few, if any, banks are likely to hit that high ceiling during the second round.

“The banks have been less than helpful in all this,” said Brian Rindos of Maryland, owner of care provider Kids Adventures, who tried more than nine lenders after several turned him away or ignored him altogether. On Friday, he said he received tentative approval for a loan but was still waiting for confirmation on Sunday.

“Let’s say I’m cautiously optimistic … this time.”

Reporting by Pete Schroeder and Michelle Price; additional reporting by Ann Saphir; editing by Diane Craft, Lisa Shumaker and Jonathan Oatis

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