It appears that the rollout of the second round of Paycheck Protection Stimulus Loans has not gone well for some companies due to issues in the application.
In a Jan. 25 letter, the American Bankers Association said it had identified “significant issues” that prevent companies from obtaining the funds.
“Since the reopening of the PPP application process on January 11, 2021, the ABA and our member banks have identified specific issues, which hamper the ability of some banks to provide loans (under the program) in their communities.” , indicates the letter. .
Loans are an important part of the federal stimulus package and are forgivable if an employer spends at least 60 percent of the money on payroll costs.
Michel Malecot, owner of The French Gourmet, said he is now selling his collection of award-winning wines and using his line of credit. His application for a second PPP loan is in limbo.
“It is very worrying because I am not hearing anything, I am not receiving any updates. I do not know if this is being addressed,” he said. “It’s kind of like, what am I doing?” “
The ABA says the Small Business Administration system blocks requests if a borrower has a pending forgiveness request. The ABA says this is incorrect under government leadership and needs to be changed.
“This technical error leads the SBA to not approve a significant number of second-draw loans,” the letter said.
Additionally, the ABA claims that lenders recite a high number of incorrect error messages when attempting to submit loans through the application portal, such as incorrect loan limits.
“In addition, attempts to obtain clarification from lenders through the portal’s messaging system have met with silence,” the letter said.
Businesses with fewer than 300 employees who have lost at least 25 percent of their income are eligible for the loans. They are forgivable if at least 60 percent of the funds are spent on the payroll.
Kelly DuFord Williams, managing partner of Slate Law Group in San Diego, said her clients’ demands are suffering the same fate.
“It’s been reviewed by the bank, it’s ready to go, they didn’t see any errors, and then it’s rejected by the SBA software for some insignificant and incorrect reason,” she said.
The SBA said it was starting to address some of the concerns, including holding a nationwide appeal with lenders. He said in an initial review that he identified anomalies in 4.7% of the data submitted by lenders that would require follow-up.