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Financial Services Law Insights and Observations

SBA addresses PPP loan error codes

Federal Issues SBA Covid-19 Small Business Lending CARES Act

Federal Issues

On February 10, the Small Business Administration (SBA) issued an updated procedural notice providing instructions for lenders addressing Paycheck Protection Program (PPP) loan error codes. The notice, which revises guidance provided in a previously issued procedural notice (covered by InfoBytes here), addresses (i) Second Draw PPP loan guaranty applications where there is a hold code on the borrower’s First Draw PPP loan, as well as (ii) First Draw PPP loan guaranty applications and Second Draw PPP loan guaranty applications with compliance check error messages. SBA provides lenders with several methods for resolving hold codes and compliance check error messages, including resolution through lender certification or resolution through SBA review. The notice also addresses how SBA handles duplicate loans, loans with multiple DUNS numbers, and other hold codes that cannot be resolved by these processes. The same day, SBA also announced plans to take additional steps to improve the PPP, including (i) enabling “lenders to directly certify eligibility of borrowers for First Draw and Second Draw PPP loan applications with validation errors to ensure businesses who need funds and are eligible receive them as quickly as possible”; (ii) allowing “lenders to upload supporting documentation of borrowers with validation errors during the forgiveness process”; and (iii) creating “additional communication channels with lenders to assure [SBA is] constantly improving equity, speed, and integrity of the program, including an immediate national lender call to brief them on the Platform’s added capabilities.”

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