Why PPP loan applications are blocked and how to move yours forward
Now we know that the last cycle of the Paycheque Protection Program (P3P) is proceeding much more slowly than the first cycles. As of this writing, only 74% of the $ 284 billion in PPP funds have been approved. Congress has just passed a law 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 US economy needed this extension. And while it’s passed, the extension doesn’t necessarily mean the process will be less frustrating for those who need immediate financial assistance.
Unfortunately, this round of the program has been rife with fraud, and it has only increased in the last few weeks. Small businesses that have already been battered by the pandemic are now facing a closer scrutiny of their claims. As a result of this increased oversight, lenders and the SBA now have less time to process legitimate PPP loan applications.
If you are one of the business owners with an application in the queue, please rest assured that there is still enough time in the program to receive your funds. There are a few critical steps in the process where requests get stuck. Here are common issues and what you can do to move your funding request forward.
Initial request unfinished
You’ll want to make sure that your PPP instant loan application is as complete as possible, right off the bat. If you have already submitted an application, go back and make sure it is 100% complete. If possible, don’t leave anything blank, assuming you can fill it in later. Lenders should prioritize applications that can be automatically identified as complete.
Also, be as realistic and specific as possible when filling out your application. Don’t inflate your income or other financial information, and don’t round up your loan numbers. If you are applying for a second raffle PPP loan, you should make sure that each number and name exactly matches the first raffle loan application. If you return to your app and make any changes, you must re-sign the completed application.
Not enough documentation
Documentation is essential in this cycle. Each business entity has different requirements, so be sure to provide the required documents for your type of business. The more documentation you can provide, the better.
Regardless of the business entity, however, there are a number of things that you absolutely must have, and some things that will definitely help you 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%. In addition, include a valid void check, complete tax returns (ideally from 2019 and 2020), a complete and signed application, a document proving you were in business before February 15, 2021, and a bank statement from February 2020. .
If you can, go beyond that by providing one of the following to prove the legitimacy of your business: articles of incorporation, utility bill showing the business address, a filing from the Secretary of State, or a letter EIN.
I did not receive an SBA number + SBA errors and hold codes
If you don’t have an SBA number yet, it means your application is likely incomplete. You must provide all the required documentation; the more you give, the better.
If you have provided all documentation and still do not have an SBA number, it is likely that your application has been denied by the SBA or is under review. There are several reasons why an application may be under review. The most common reason for a review is a duplicate submission, which means the borrower has completed an application with another lender who has already submitted it to the SBA. Here are the top 5 reasons why applications are held by the SBA:
- Duplicate Submission – The borrower completed an application with another lender and that other lender submitted it to the SBA
- First Draw Loan Reserved under Wrong Type of TIN – Must be resolved with cooperation from First Draw Lender and SBA as it can only be repaired in ETRAN
- The borrower filled out the wrong application – The first raffle request was submitted to the SBA but the borrower already had a first raffle. The borrower must complete a second raffle request.
- Incorrect answer to question 4 on the application – The borrower marked “yes” to question 4 (received EIDL between 1/1/2020 – 4/3/2020) when he should have checked “no”. They did not receive their EIDL between these dates.
- First Draw Loan Number Cannot Be Validated – The borrower entered an invalid number or did not fill in an actual number at all.
Received an SBA number but no contract
If you have an SBA number but not yet have a contract, your application is likely in progress or has not passed a fraud review, document review, or quality control review. To be proactive, provide one of the following: Articles of Incorporation, utility bill showing address, Secretary of State filing, EIN letter, or other government issued document to prove that your business is legitimate and that you are the owner of the business (the lender must connect the owner to the business with the appropriate documentation).
Received a contract but not yet funded
If you received and signed a contract, but it was not funded, there could be several reasons. Your request may contain errors on the contract, including an incorrect name, incorrect bank routing number, or incorrect bank account number. It is also possible that your application did not pass the lender’s quality control review.
As financial institutions and FinTech providers across the country work diligently to process these loans, we urge applicants to proactively provide as much documentation as possible. We know how badly you and your employees need these relief funds and we want to help you get financing as quickly as possible. Fortunately, the money stays in the program and with the recently passed extension, lenders can continue to push applications through the finish line until funds run out.