SBA works to fix PPP loan bottlenecks

The U.S. Small Business Administration is taking steps to remove some of the hangups in the Paycheck Protection Program after complaints from the American Institute of CPAs and others. The SBA said Wednesday that it’s working with lenders to increase access for the smallest businesses on a more equitable basis […]

The U.S. Small Business Administration is taking steps to remove some of the hangups in the Paycheck Protection Program after complaints from the American Institute of CPAs and others.

The SBA said Wednesday that it’s working with lenders to increase access for the smallest businesses on a more equitable basis and to provide more rapid, efficient distribution of funds. Since Congress revived the program in December with $284 billion in funding, the SBA has approved $104 billion in PPP funds so far this year for more than 1.3 million small businesses. About 82 percent of the loans in this round are going to small businesses asking for less than $100,000, and 28 percent of the businesses are located in rural communities. The SBA has also been increasing its partnerships with community banks and minority-owned depository institutions to help deliver loans to minority communities and underserved populations.

The PPP has helped prop up the economy since it was introduced in the CARES Act last March to address the economic fallout from the COVID-19 pandemic. It provides forgivable, SBA-backed loans to small businesses that retain their employees.

Shuttered downtown clothing shops in Los Angeles amid the coronavirus pandemic

Mario Tama/Getty Images North America

Last year, the program endured a rocky rollout with ever-changing rules and regulations that made it difficult for many small businesses to get the loans they needed. Instead many of the loans went to large companies and chains, while other loans went to fictitious businesses with no employees.

Accountants have been working with their small business clients to apply for the loans and then for forgiveness of those loans. This year, with numerous fixes and safeguards against fraud in the program, it has been running more smoothly, but some of those safeguards have also presented obstacles to businesses applying for the loans. Last week, the AICPA sent a letter to the SBA asking it to fix problems with the SBA’s E-Tran system for processing the loans, as it has been producing error codes in response to validation checks in the system (see story). The SBA said it is taking steps to improve the speed for resolving data mismatches and eligibility concerns so small businesses have as much time as possible to access PPP funds, while maintaining the integrity of the program.

“While we are excited that we are doing a better job of reaching the hardest hit industries and communities, we are committed to taking additional steps to ensure that there is equitable access for underserved businesses and that we are leading with empathy to support small businesses in a difficult spot,” said SBA senior advisor Michael Roth in a statement.

The changes announced Wednesday will enable lenders to directly certify eligibility of borrowers for both first-draw and second-draw PPP loan applications with validation errors to ensure businesses who need funds and are eligible receive them as soon as possible. The first-draw loans are for businesses who have yet to borrow money from the program, while the second-draw loans are for those who received PPP loans last year and are applying for additional loans this year.

Another change will allow lenders to upload supporting documentation of borrowers with validation errors during the loan forgiveness process. The SBA is also adding more communication channels with lenders in an effort to improve the equity, speed and integrity of the program. The agency set up an immediate nationwide call with lenders to brief them on the platform’s extra features.

Next Post

Sini: Car insurance scheme targeted East End Latinos

Thu Feb 18 , 2021
Four Suffolk County residents and a Virginia woman accused of participating in a scheme to sell fraudulent car insurance to Latino victims on the East End have been arrested and face criminal charges, Suffolk District Attorney Timothy Sini announced Friday. The defendants defrauded at least 120 victims, Sini said. The […]

You May Like