Small business owners pledged extra help with PPP loan applications

Small business owners pledged extra help with PPP loan applications

WASHINGTON – Lenders say many small businesses asking for extra help under the government’s coronavirus relief program are finding that anti-fraud efforts are removing obstacles to getting the money they need to stay in flow.

Now the Small Business Administration, which runs the Paycheck Protection Program, says help is on the way.

The problem has to do with the signals the Small Business Administration has placed on about 240,000 initial P3 recipients for everything from clerical errors to indications of possible wrongdoing. These flags block the ability of lenders to make second loans to borrowers, after the program reopens this month.

“If you’re wearing your fraud mitigation hat, it’s not bad at all,” said

Tony Wilkinson,

Managing Director of the Business Group of the National Association of State Guaranteed Lenders. “But some of these companies are hanging by a thread and some of them needed the money yesterday.” Mr. Wilkinson said some of the flags are related to errors when entering master data.

The SBA says it is working to remove roadblocks. He is hosting a nationwide call Tuesday afternoon to help participating PPP lenders figure out how to resolve flags.

The agency also plans to provide additional advice to lenders, and is advising field offices on how to help borrowers and lenders who fall behind with second-time requests. Once the flags are resolved, those apps will be given priority in the approval process, a new SBA official said.

The PPP, which reopened to new and returning applicants after being shut down since last August, provides forgivable loans to small businesses, self-employed workers and others to help them weather the coronavirus pandemic. Loans are issued by lenders, such as banks and credit unions, and are backed by the SBA.

Many borrowers were unaware of the flags and were surprised to see their second application delayed, according to the SBA official, who is working with the agency’s career staff on the matter.

It is not known how many of the 240,000 borrowers reported request additional assistance. The SBA has approved more than 400,000 loans worth about $ 35 billion since the program reopened, according to the agency. Lenders have stated that most of the applicants are second time borrowers.

Some lenders report that up to 35% of second-time applications submitted to the SBA for approval had an indicator that prevented the loan from being processed, according to Wilkinson of the National Association of Government Guaranteed Lenders.

The initial execution of the program from last April to August was hampered by reports of potential fraud and waste, prompting warnings from the SBA Inspector General.

When it reopened the program, the SBA said it was taking further steps to verify the identity and data of applicants before approving loans. Unlike the first iteration of the program, the agency does not approve loans immediately, but performs these reviews first. This means that borrowers typically wait longer for loan approvals.

The SBA’s efforts to resolve the issue with the reported candidacies are part of an effort to keep President Biden’s campaign pledge that small business aid against the coronavirus will be distributed fairly, according to the new head of the department. SBA.

The first edition of the program struggled to reach small businesses with weak ties to financial institutions. Small business advocates have also raised concerns that small businesses with little technical knowledge and minority-owned businesses have difficulty accessing the program, especially at the start.

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