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Financial Services Law Insights and Observations

SBA addresses PPP loan review issues

Federal Issues Covid-19 SBA Small Business Lending CARES Act

Federal Issues

On January 26, the Small Business Administration (SBA) announced that it is “taking steps to improve the First Draw Paycheck Protection Program [PPP] loan review” in order to give small businesses more time to access PPP funds. SBA acknowledged that it identified “anomalies” in approximately 4.7 percent of lender-submitted data for the first round of PPP loans, primarily data mismatches and eligibility issues. SBA is encouraging lenders and borrowers to work together to resolve the issues so that affected borrowers can access a second round of loans, and the SBA has stated its commitment to “automatically move favorable decisions to approval.”  Moreover, the SBA is addressing issues with the Second Draw PPP loan applications by (i) briefing lenders on a national call with respect to the first draw loan review and the potential impacts on second draw application approvals; (ii) training the SBA’s lender relations specialists to support lenders and borrowers with issues; and (iii) providing additional guidance to PPP lenders on the review and resolution process.

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