SBA Addresses PPP Delays

January 27, 2021

On Tuesday, Jan. 26, the U.S. Small Business Administration (SBA) responded to delays lenders have experienced under the new round of Paycheck Protection Program (PPP) processing. The day prior, Monday, Jan. 25, the American Bankers Association (ABA) weighed in with SBA highlighting the issues their members have raised, specifically:

  • The PPP portal was preventing many lenders from uploading borrower applications for second-draw loans if the borrower still has a pending forgiveness application for a first-draw loan with SBA;
  • Lenders are receiving a high number of incorrect error messages when submitting PPP loan applications for the portal; and
  • Guidance on required documentation for the 25 percent revenue drop for second-draw loans was released AFTER many banks had already completed borrower applications. Specifically, SBA flagged some 240,000 initial PPP recipients for everything from clerical errors to indications of possible wrongdoing, which is preventing lenders from moving forward on the second-draw loans for those borrowers.

The delays are primarily a result of SBA’s efforts to reduce fraud and ensure those small businesses who most need assistance get it—something outlined in the legislation approving the renewed PPP. SBA Acting Administrator Tami Perriello underscored that sentiment in a statement, saying: “…The Agency is committed to making sure compliance checks are executed on the front-end.”

In an effort to remedy the situation, SBA has said it will: hold a call with lenders to address first-draw loan reviews and potential holds impacting borrowers looking for a second-draw loan; ensure Agency’s field staff have information to help lenders and borrowers; and provide additional guidance to PPP lenders on the review and resolution process.

NSBA has continued to support efforts to reduce fraud in the PPP, but maintains that expediency must also be a priority in terms of getting cash-strapped small businesses—and their employees—the help they need.

According to SBA, this latest round of PPP has already resulted in more than 400,000 loan approvals totaling approximately $35 billion.

Click here for additional details and an analysis on the PPP from NSBA.