April 29 (UPI) -- The Small Business Administration briefly closed applications for emergency small business loans to all but the nation's smallest lenders on Wednesday.
SBA Administrator Jovita Carranza wrote on Twitter that the agency's systems would only accept applications for loans under the Paycheck Protection Program from lenders with less than $1 billion in assets from 4 p.m. EDT until 11:59 p.m. EDT.
Carranza said the restriction aimed to "assist small community lenders and ensure their small business customers have access" to the loans and that institutions with more than $1 billion will be able to submit loans outside of the timeframe.
The decision drew criticism for blocking out large banks also seeking to provide loans to small businesses under the program.
"With SBA blocking nearly 800 banks, relief for potentially thousands of small business owners and their employees will be delayed. A better solution would be a fully operational system that allows banks of all sizes to provide support to Main Street," former president and CEO of the Financial Services Forum, Kevin Fromer, said.
Paul Merski, group vice president for congressional relations at the Independent Community Bankers of America, praised the move for preventing loans from going to large businesses such as the NBA's Los Angeles Lakers which returned a $4.6 million loan on Monday.
"Frankly, allowing community banks under $1 billion is one of the best ways to ensure small mom-and-pop businesses get PP funding versus the LA Lakers," Merski said.
Congress established the PPP as part of the $2.2 trillion Coronavirus Air, Relief and Economic Security Act, providing $350 billion in loans to small businesses amid the COVID-19 pandemic. The program quickly ran out of funds only to be replenished with another $310 billion in a bill signed last week.