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By now, we know the latest round of the Paycheck Protection Program (PPP) is moving much slower than the first rounds did. As of this writing, only 74% of the $284 billion in PPP funds have been approved. Congress has just passed legislation that will extend the application deadline to May 31, 2021. It will also give lenders until June 30 to fund PPP loans.
Small business owners and the American economy needed this extension. And though it has passed, the extension doesn’t necessarily mean the process will be any less frustrating for those in need of immediate financial relief.
Unfortunately, this round of the program has been plagued with fraud, and it’s only increased in the last few weeks. Small businesses that have already been dealt an unfair hand by the pandemic now have to contend with further scrutiny on their applications. Due to this increased scrutiny, lenders and the SBA now have less time for processing the legitimate PPP loan applications.
If you’re one of the business owners with an application in the queue, rest assured there is still enough time left in the program to receive your funds. There are a few critical stages in the process where applications are getting held up. Here are the common problems and what you can do to keep your application moving forward to funding.
Unfinished Initial Application
You’ll want to ensure your PPP loan application is as complete as possible, right out of the gate. If you’ve already submitted an application, go back and ensure it is 100% complete. If at all possible, don’t leave anything blank, thinking you’ll be able to fill it in later. Lenders have to prioritize applications that can automatically be identified as complete.
Additionally, be as realistic and specific as possible when completing your application. Don’t inflate your revenue or other financial information, and don’t round your loan numbers. If you are applying for a second draw PPP loan, you need to make sure each number and name matches the first draw loan application exactly. If you do go back into your application and make changes, you must re-sign the completed application.
Not Enough Documentation
Documentation is critical in this round. With each business entity comes different requirements, so be sure you provide the required documents for your business type. The more documentation you can provide, the better.
Regardless of business entity, however, there are a number of things that you absolutely must have, and a few things that will definitely help along the way.
Each application must include the front and back of a driver’s license or government-issued ID for each business owner who owns more than 20%. Additionally, include a valid voided check, complete business tax returns (ideally from 2019 and 2020), a complete and signed application, a document proving you were in business before Feb. 15, 2021 and a Feb. 2020 bank statement.
If you can, go above and beyond by providing any of the following to prove your business legitimacy: articles of incorporation, utility bill showing the address of the business, a Secretary of State filing or EIN letter.
Didn’t Receive An SBA Number + SBA Errors and Hold Codes
If you don’t have an SBA number yet, it means that your application is likely incomplete. You need to provide all of the required documentation; the more you give, the better.
If you have provided all of the documentation and still don’t have an SBA number, it is likely that your application has been declined by the SBA or is under review. There are several different reasons an application may be under review. The most common reason for a review is a duplicate submission, meaning the borrower filled out an application with another lender who has already submitted it to the SBA. Here are the top 5 reasons that applications are being held by the SBA:
- Duplicate submission - Borrower filled out an application with another lender and that other lender submitted it to the SBA
- First draw loan booked under the wrong TIN Type - Must be resolved with cooperation of first draw lender and the SBA as it’s only fixable within ETRAN
- Borrower filled out the wrong application - First draw application was submitted to SBA but the borrower already had a first draw. Borrower needs to fill out second draw application.
- Answer question 4 incorrectly on application - Borrower marked “yes” to question 4 (received EIDL between 1/1/2020 - 4/3/2020) when they should have marked “no”. They didn’t receive their EIDL between those dates.
- First draw loan number cannot be validated - Borrower either entered invalid number or didn’t fill out a real number at all.
Received An SBA Number But No Contract
If you have an SBA number but no contract yet, your application is likely undergoing or did not pass a fraud review, document review or a quality control review. To be proactive, provide any of the following: articles of incorporation, utility bill showing address, Secretary of State filing, EIN letter or other government-issued documentation to prove your business is legitimate and you are the business owner (the lender needs to connect the owner to the business with proper documentation).
Received A Contract But Not Funded Yet
If you have received and signed a contract, but it hasn’t been funded, there could be a few reasons. Your application may have errors on the contract, including the wrong name, wrong bank routing number, or incorrect bank account number. It’s also possible your application hasn’t passed the lender’s quality control review.
As financial institutions and fintech providers across the country work diligently to process these loans, we implore applicants to proactively supply as much documentation as possible. We know how badly you and your employees need these relief funds, and we want to help you get funded as expeditiously as possible. Thankfully, money remains in the program and with the recently-passed extension, lenders can continue to push applications across the finish line until the funds are exhausted.
