PPP Loan Troubleshooting: Tips From a Lender

A lender tells us the most common mistakes that will make your PPP loan application go to the bottom of the pile

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We’ve seen in the news that the $349 billion Paycheck Protection Program (PPP) was off to a rocky start upon launch last week. For small businesses struggling to stay afloat during the pandemic, streamlining the emergency loan application process and avoiding snags is critical.

Since Friday, April 3, businesses with 500 or less employees have been in a mad rush to obtain the government-issued bandaid funds: The money, loaned at a 1% interest rate over 2 years, is offered on a first-come, first-serve basis until it runs out. It’s an unprecedented financial relief attempt in an unprecedented economic crisis.

Khoi Dang, executive vice president and general counsel for First Choice Bank, told Workest that the desperation when filing for a PPP loan is causing business owners to face delays. Remember that first impressions count.

“Take time with the application to make sure that it is complete and presentable,” Dang emphasized. “If it looks messy, illegible, or there is missing information, it will be kicked to the end of the line.”

“Take time with the PPP application to make sure that it is complete and presentable,” Dang emphasized. “If it looks messy, illegible, or there is missing information, it will be kicked to the end of the line. People’s jobs are at stake and banks are forced to make decisions as to which business is more deserving. The only non-discriminatory way to do this is through a complete application.”

When diving into the SMB paperwork, he had 2 simple pieces of advice at the start of the process:

  • Type, don’t handwrite.
  • And don’t miss a thing.

“[Typing] provides clarity. Handwritten forms go to the end. PPP applications need to be absolutely complete because we use the forms for data entry. If we need to look up anything, then it slows the process down and we will move on to the next file in order to keep things moving.”

In addition to the logistical matters at hand, Dang reminded that there are humans handling the applications.

“As with nurses and doctors, banks are trying to put bandages on the local economy so that we all return to a functioning society. Please be respectful.”

3 SMB PPP loan application tips from a lender:

1. What can businesses do to expedite the application process?

This is a federally insured loan, so providing false information to the feds is a federal crime. Your calculations of maximum loan amounts are tied to payroll forms:

  • Include payroll forms, IRS Forms 940 and 941 — these are necessary to validate the loan amount.
  • Rounded numbers (such as the average payroll expense of $15,000, and the maximum loan amount of $37,500) are immediately suspect and will be moved to the end of the line because of heightened scrutiny.
  • When typing in address information, the SBA requires the 4-digit zip code extension. 99.99% of applications do not have this information and the lenders need to look it up themselves. This slows the process. Have it in your application.
  • NAICS code. This can be found on the front of your federal taxes. Have it in your application (even though the application doesn’t call for it). This is a required input, and for lenders to look it up slows down the process.

2. Common mistakes that you are seeing, which should be avoided?

Don’t hurry the form, handwrite the form, use the business EIN as your own SSN, or failing to disclose prior SBA loans (the SBA processing system remembers who has prior SBA loans).

3. What additional advice do you have?

People need to understand that the PPP money will get dispersed, but it needs to happen in a prudent and verifiable way.

Do not call your bank or send incessant amounts of emails. Remember that they are working with limited staff and are dealing with COVID-19 as well.

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