Why PPP Loan Applications Get Stuck and How You Can Keep Yours Moving

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Why PPP Loan Applications Get Stuck and How You Can Keep Yours Moving

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We now know that the last round of the Paycheck Protection Program (PPP) is progressing much more slowly than the first rounds. As of this writing, only 74% of the $ 284 billion in PPP funds have been approved. Congress has just passed a bill that extends the submission deadline to May 31, 2021. Also, there will be lenders through June 30th to fund PPP loans.

Small business owners and the American economy needed this expansion. And while it’s gone, the extension doesn’t necessarily mean the process will be any less frustrating for those in need of immediate financial assistance.

Unfortunately, this round of the program has been plagued by fraud and has only increased in size over the past few weeks. Small businesses that have already been treated unfairly by the pandemic must now grapple with another review of their applications. Because of this increased scrutiny, lenders and the SBA now have less time to process legitimate PPP loan applications.

If you’re one of the business owners waiting in line with an application, rest assured that the program has plenty of time left to receive your money. There are some critical stages in the process where applications are held up. Here are the most common problems and what you can do to get your application moving forward.

Unfinished initial application

You want to make sure that your PPP loan application is as complete as possible from the start. If you’ve already submitted an application, go back and make sure it’s 100% complete. If possible, don’t leave anything blank because you think you can fill it in later. Lenders need to prioritize applications that can be automatically identified as complete.

Also, be as realistic and specific as possible when filling out your application. Do not exaggerate your earnings or other financial information, and do not round your loan numbers. When applying for a second drawing PPP loan, you need to make sure that each number and name exactly matches the first drawing loan application. If you call up your application again and make changes, you will have to sign the completed application again.

Not enough documentation

Documentation is crucial in this round. Each business unit has different requirements. So make sure you provide the necessary documents for your type of business. The more documentation you can provide, the better.

However, regardless of the business unit, there are a number of must-have items and a few things that will definitely help with that.

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%. Also include a valid voided check, full business tax returns (ideally from 2019 and 2020), a completed and signed application, document proving that you were in business before February 15, 2021, and a February 2020 bank statement at.

If you can, go further by providing evidence of the legitimacy of your business: articles of association, a utility bill with the company’s address, a filing from the Secretary of State, or an EIN letter.

No SBA number + SBA errors and hold codes received

If you do not already have an SBA number, your application is probably incomplete. You must provide all the necessary documents; the more you give, the better.

If you’ve submitted all of the documentation and still don’t have an SBA number, your application has likely been rejected by the SBA or is in the process of being reviewed. There are several reasons an application might be considered. The most common reason for a review is double filing, meaning the borrower has completed an application with another lender that has already submitted it to the SBA. Here are the top 5 reasons why applications are being withheld by the SBA:

  1. Duplicate filing – the borrower completed an application with another lender and that other lender submitted it to the SBA
  2. Initial education loan booked under incorrect TIN type – Must be resolved in cooperation with the initial education lender and the SBA, as it can only be resolved within ETRAN
  3. Borrower completed the wrong application – The first drawing application was submitted to SBA, but the borrower already had a first drawing. The borrower must complete the second drawing application.
  4. Answer question 4 incorrectly in the application – the borrower marked question 4 with “yes” (received EIDL between 01/01/2020 – 03/04/2020) when he should have marked it with “no”. You did not receive your EIDL between these dates.
  5. Unable to validate the first drawing credit number – the borrower either entered an invalid number or did not enter a real number at all.

Got an SBA number but not a contract

If you have an SBA number but don’t already have a contract, your application is likely under or failed fraud, documentary, or quality control reviews. To be proactive, provide your charter, utility bill with address, foreign minister’s filing, EIN letter, or other government-issued documents to prove that your business is legitimate and that you are the business owner (the lender must have a Connecting the owner to the company with proper documentation).

Contract received but not yet funded

If you received and signed a contract, but it was not funded, there could be a number of reasons. Your application may contain errors in the contract, including wrong name, routing number, or bank account number. It is also possible that your application failed the lender’s quality control.

With financial institutions and fintech providers across the country working diligently to process these loans, we ask applicants to proactively provide as much documentation as possible. We know how badly you and your employees need these funds and we want to help you get the funding as soon as possible. Fortunately, money remains in the program and with the recently passed extension, lenders can continue to push applications across the finish line until funds are depleted.