ppp second draw issues

Note that all funds from First Draw loans must be used before applying for a Second Draw loan. If you did not apply for a second draw loan but have hold code(s) on your 2020 first draw application, your lender must resolve the hold code(s) during the forgiveness process. The SBA literally had days to come up with a system to process applicants from lenders in an effective manner. Some borrower applications may have hold codes that trigger one of two messages: “Internal SBA Hold – Details Not Publicly Available” or “Internal SBA Hold that cannot be cleared at this time – Details Not Publicly Available.” Lenders can reach out to the SBA through the platform to address “Internal SBA Hold – Details Not Publicly Available” messages. SBA Procedural Notice 5000-20092 provides two tables to help identify additional support to resolve hold codes and compliance check error messages. Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor. As of March 21, the number of PPP loans granted in Texas totaled to 236,518, amounting to over $15 billion. Prior to the AICPA’s letter being sent, the organization presented a PPP Town Hall meeting where they addressed four key points. Beginning today, the PPP Platform will no longer reject second draw PPP loan applications for “unresolved borrowers” who may have been ineligible for some or all of their first draw PPP loan. Based on a review that was conducted on the initial PPP process, the SBA implemented fraud prevention and application review steps to guard against fraudulent claims. First Draw PPP Loans. There are currently more than 40 different “error codes” related to these additional information … It's been almost a week on Tuesday and not a single response despite multiple messages to the SBA about this. Fortunately, the year-end stimulus package allocated a new round of funding that also includes funds for “second draw” PPP loans. In those cases, the SBA said in a news release, lenders and borrowers will be required to “follow up” before borrowers can access a second-draw PPP loan. January 12, 2021 . Under the first PPP program that effectively started in April 2020, the SBA faced major issues with the millions of PPP applications. All hold code(s) and compliance check error message(s) must be resolved and the authorized lender must certify that there are no outstanding hold code(s) or compliance check error message(s). The U.S. Small Business Administration (SBA) has approved over 400,000 loans worth approximately $35 … An unresolved issue does not prohibit a borrower from receiving a second draw loan but it may affect the timing of a second draw funding to a borrower with economic need, if not resolved in a timely manner. However, after the loan was issued, the SBA applied an automated screening tool that used public information and applied eligibility and fraud detection rules to identify non-compliance with eligibility requirements, fraud or abuse, or anomalies indicating non-compliance. This, of course, was primarily due to this being a brand-new program. We look forward to helping you should you choose to apply again. Hold codes and error messages in SBA table 2 (see page 11) require the lender to submit support into the SBA’s platform. A second draw PPP loan borrower with a NAICS code starting with 72 gets 3.5 months of their average payroll cost for the owner rather than 2.5 months. This new requirement is causing the application to be declined, since one of the acceptance validation checks is to confirm the same number as the original PPP application. In any case, when it comes to considering whether or not you should apply for PPP 2.0, we would like to encourage you to be very deliberate in the decision-making process. Other PPP Loan Resources. Key insights. New funding is being allocated for both first-time loans and for businesses seeking a second draw. The Economic Aid Act reauthorizes lending under the PPP through March 31, … The guidance addresses fees for new first-draw PPP loans and second-draw PPP loans and outlines reporting requirements for lenders. If you have further questions, reach out to your Rea advisor or a member of the firm’s PPP task force. Qualifications for the Second Draw. Loans with … Just because a business meets the gross receipts reduction requirement does not mean they should automatically apply for PPP 2.0. Hinckley Allen Corporate & Business By: Stephanie J. Baton. Furthermore, the SBA E-Tran system is flagging 20-30 percent of all first- and second-draw PPP applications for additional review based on validation checks. In many instances, what is being seen, is that the small business owner is being incorrectly notified that they have a criminal record. Starting in 2021, the SBA began conducting compliance checks on the front-end (before the issuance of an SBA loan number) for first and second draw loans using a modified automated screening tool and information from the Treasury’s Do Not Pay lists. A new PPP Q&A focuses on how to calculate revenue reduction and maximum loan amounts for second draw PPP loans. Each member firm within the Nexia International network is a separate legal entity. Stricter eligibility requirements, added by Congressional lawmakers in response to scathing criticism of the initial program’s lack of controls, are a hallmark of PPP2. Furthermore, economic uncertainty has drastically changed since last April. Nexia International Limited does not deliver services in its own name or otherwise. An unresolved hold issue does not prohibit a borrower from receiving a second draw loan, but it may affect the timing of a second draw funding. By Matthew Rambaran, Manager CLA T. 267.419.1145 Email. PPP Second Draw allows borrowers who previously received a PPP loan to receive a second potentially-forgivable loan to be used toward payroll expenses, rent, utilities, and mortgage interest. Certain 2020 first draw PPP loans were flagged with hold codes after SBA review. © 2020 CliftonLarsonAllen. Hey friends- is anyone else having issues with their second draw PPP loan saying that their first one is under review and it's holding up your second one? That being said, while the entire PPP loan forgiveness exercise is taking longer than anticipated, we would like to urge you to remain patient. How to Tackle Unresolved First and Second Draw PPP Loan Issues. The California license number is 7083. Lenders are advised to work with their borrowers in a timely manner to assess the situation and, if they feel confident it will resolve the issue, supply additional information. The entity has used (or will use) the full amount of their First Draw. The SBA has controls in place to identify duplicate loan requests. The … Second draw with more profits in 2020. There is about $212 billion still available. While the need for financial assistance through PPP 2.0 continues to be great, it’s important to know that there is plenty of cash available for organizations in need. Under the CARES Act in 2020, lenders could make and approve PPP loans without prior Small Business Administration (SBA) review. Terms of the second PPP loan. Borrowers seeking to apply for First Draw Paycheck Protection Program (PPP) loans or Second Draw (PPP2) loans are required to certify on loan applications that "current economic uncertainty makes this loan request necessary to support the ongoing operations" of the borrower or applicant. CliftonLarsonAllen is an independent member firm of the “Nexia International” network. Per the SBA’s January 14, 2021 Interim Final Ruling (IFR) Protection Program (PPP) Second Draw Loans, if your first draw PPP loan has an unresolved issue, which we now know may be due to hold codes or compliance check error messages, the SBA will notify the lender and no SBA loan number will be issued until the original loan request issue(s) are resolved. In this situation, you many want to extract only the required additional support to share with your lender. The SBA has prepared a questionnaire for those who are on the fence regarding certification. The SBA has 10 days to issue guidance on how the second draw program will operate. Duplicate loans may be triggered if the tax ID is already in use on an application or if an applicant applies for more than one first or second draw loan. The letter outlines the following example: “One of the new requirements for second-draw sole proprietor applications is to use an EIN number instead of their SSN, even though many used their SSN with their original PPP application. If you have an unresolved issue on your first draw PPP loan, move quickly to identify the additional documents requested and supply them to your lender. The Economic Aid Act also permits an eligible business that received a First Draw PPP Loan to apply for a second draw of PPP loan proceeds (a Second Draw PPP Loan), albeit by adopting generally more restrictive eligibility criteria and reducing the maximum amount of proceeds available for a … In some instances, you may have already included the required documentation, but the support may not have been easily identifiable by the SBA. If a borrower did not apply for a second draw loan but has hold code(s) on it’s 2020 first draw application, the lender must resolve the hold code(s) during the forgiveness process. It’s also important to note that the SBA’s loan processing system has put in place a loan eligibility amount cap of $35,000 per employee for both first- and second-draw applications. The guidance confirms much of what we already surmised about the definition of gross receipts for nonprofit and for-profit PPP borrowers, the exclusion of PPP funds from gross receipt calculations, and the methodologies for calculating payroll costs to determine maximum loan size. If you’ve already applied for loan forgiveness and are still waiting on a response, rest assured that your application will be processed – it’s just taking a little longer than expected. Even after taking the time to redo their certifications, borrowers may still be declined on the same application due to another incorrect validation rule. The North Carolina certificate number is 26858. Move quickly to identify the additional documents requested and supply them to your lender, who can then forward them to the SBA. The other three quarters in 2020 can have a substantially higher income … If an issue is identified, the tool generates a compliance check error message, which in most cases will identify the same error as the hold codes from the 2020 first draw PPP loan. An unresolved hold issue does not prohibit a borrower from receiving a second draw loan, but it may affect the timing of a second draw funding. SBA improves review process for second-draw PPP loans. There are currently more than 40 different “error codes” related to these additional information requests and the process for resolving these error codes is unclear. The industry in which your business operates makes a huge difference when it comes to securing financial assistance. Take action now to resolve the issue. The First PPP Round Had Significant Issues. Similarly, if a borrowers’ application for a first or second draw loan submitted by a lender receives a compliance check error message, the application will also automatically move to research status and the platform will provide the lender an opportunity to resolve the outstanding issue. According to the SBA, around 4.7 percent of lender-submitted data from the previous rounds of PPP contained some data mismatches and eligibility concerns. Eventually things improved, … That’s why the American Institute of CPAs (AICPA) recently sent a letter to the U.S. Small Business Administration (SBA) to request clarification on “a number of very significant operational changes to the PPP by the SBA which are not fully understood, as well as some process and system issues which need to be addressed in order to effectively provide critical relief to eligible organizations.”. The lender must submit support at the time of forgiveness or upon the SBA’s request. Once the issue(s) are resolved, loan requests will automatically move to the next stage of the process and should not require re-entry by the lender. PPP Second Draw -SBA is kicking it out due to TIN/SSN issues that don't actually exist. We switched banks because our first bank didn't open up right away. Claiming a portion of the Paycheck Protection Program (PPP) isn’t necessarily an easy process – especially if your the owner of a small business. Note: The NAICS code that starts with 72 identifies accommodation and food service businesses. CliftonLarsonAllen is a Minnesota LLP, with more than 120 locations across the United States. All rights reserved. For second draw loans, the bill appears to exclude from eligibility borrowers that previously qualified as a “small business concern” under the “alternative size standard” or the borrower’s NAICS Code. The entity employs 300 or fewer employees. This was expected to be the case. If you have any questions about the application process, the loan forgiveness process, or anything else pertaining to securing financial assistance during the COVID recovery phase, please reach out to me, or a member of the PPP task force for assistance. For first-draw PPP loans made on or after Dec. 27, 2020, lenders will receive processing fees in the following amounts: 50% or $2,500, whichever is less, for loans of not … The rejections have triggered holds on borrowers’ second-draw PPP loan applications and delayed the vital funding they needed. That’s why those of us in the CPA profession have spent countless hours going over all the details so you don’t have to. Our bank for the first PPP emailed this today to our bank for the 2nd PPP. Even after taking the time to redo their certifications, borrowers may still be declined on the same application due to another incorrect validation rule. "CliftonLarsonAllen" and "CLA" refer to CliftonLarsonAllen LLP. If a second draw borrowers’ application is submitted by a lender and the borrower has hold code(s) from its 2020 first draw loan, then the application will automatically move to research status and the platform will provide the lender an opportunity to resolve the outstanding issue. Business owners should click here to access the resource and leaders of nonprofit organizations should click here. Last week, the SBA offered new remedies for handling rejections. Need help with PPP loan unresolved issues? It appears to limit second draw loans to businesses that have no more than 300 employees. If you do decide to move forward with the application process, remember that the deadline to apply for PPP 2.0 is March 31, 2021. PPP Loans – Second Round. Unfortunately, we have no explanation for the existence of these caps but are working toward getting answers from the SBA as soon as possible. Eligibility. An unresolved hold issue does not prohibit a borrower from receiving a second draw loan, but it may affect the timing of a second draw funding. By Paul McEwan, CPA, MTax, AIFA (New Philadelphia office), [ARTICLE] How The Consolidated Appropriations Act Will Impact Your State & Local Tax Filings, [ARTICLE] Understanding The Tax Provisions Outlined In The New Stimulus Package, [WHITEPAPER] IRS Issues Guidance That Impacts Deductibility Of Expenses Related To PPP Loan Funds. They must still be able to provide economic uncertainty certification in good faith. PPP will be open to businesses wanting to apply for first and second loans the week of Jan. 11. The one difference to be aware of? Table 1 codes and messages can be resolved by lenders through a certification process whereas Table 2 codes require SBA review. Since the start of PPP 2.0, the loan forgiveness process already in place from PPP 1.0 has slowed significantly or, in some cases, even paused while new PPP loan applications are being processed. The 25% reduction is only required in one quarter (every three months is a quarter) of 2020. This screening resulted in the issuance of hold codes on certain 2020 first draw PPP loans. If the lender is unable or unwilling to resolve the hold code(s) and compliance check error message(s), with exception of certain codes requiring SBA resolution, the lender must withdraw the application. PPP Deadline Extended to Continue Aid to Small Businesses, The American Rescue Plan Broadens the Employee Retention Credit, American Rescue Plan Act — Evaluating the Impact on States and Governments, Restaurant Revitalization Fund: $28.6 Billion in Cash Grants to Restaurants, Privacy policy, terms of use, and disclaimers Unfortunately, as a result of these added steps, tens of thousands of legitimate applications have been incorrectly denied acceptance by the SBA. In the meantime, note that you are not required to make loan payments during this limbo period. Protection Program (PPP) Second Draw Loans, Privacy policy, terms of use, and disclaimers, CliftonLarsonAllen Wealth Advisors, LLC disclaimers. Instead, loans to unresolved borrowers will receive a hold message that provides the lender with the reason for the hold and examples of documentation that may assist the SBA with resolving the issue. How? If you have questions regarding individual license information, please contact Elizabeth Spencer at elizabeth.spencer@claconnect.com or 425-250-6014. These points are outlined below and we’ve tried to clarify what each one means to you as you move forward with the PPP 2.0 application process. The maximum loan size for a second-draw PPP loan is $2 million, versus $10 million for a first-time PPP loan. As the Small Business Administration works to resolve several issues with the Paycheck Protection Program flagged by ABA earlier this week, it issued a procedural notice late Wednesday night outlining how it will move forward with the processing of second-draw PPP loan applications for borrowers who still have an unresolved issue related to their first-draw loan. You can be eligible for the Second Draw even if your net business income in 2020 is higher than it was in 2019. CLA can help you identify next steps based on your loan hold code or compliance check error. Our team of professionals is here to help. Anyone have any advice/experience? I have called the SBA- nothing. The Maryland permit number is 39235. Messages on First Draw PPP Loans and Second Draw PPP Loans CONTROL NO. The new PPP loan application forms, available here, first draw and second draw… Overview. CliftonLarsonAllen Wealth Advisors, LLC disclaimers. My credit Union has as well- NOTHING. Certain 2020 first draw PPP loans were flagged with hold codes after SBA review. The SBA is also committed to addressing issues more efficiently moving forward, to ensure fair and equitable access to small businesses in every community,” said SBA Acting Administrator Tami Perriello. The Small Business Administration (SBA) began accepting applications for Second Draw Paycheck Protection Program (PPP2) loans on January 13, 2021. Per the SBA’s Jan. 14, 2021 Interim Final Ruling (IFR) Protection Program (PPP) Second Draw Loans, if a first draw PPP loan has an unresolved issue, which may … Loans for the second round averaged around $63,000 and about 76% of the loans have been for $50,000 or less. Small businesses that took out a PPP loan may qualify for a second one, but they should be mindful of key differences. The Minnesota certificate number is 00963. Furthermore, the SBA E-Tran system is flagging 20-30 percent of all first- and second-draw PPP applications for additional review based on validation checks. The SBA’s reviews of initial-draw PPP loans have found anomalies — mostly data mismatches and eligibility concerns — in about 4.7% of the data submitted by lenders. Locally, the SBA has guaranteed over 3.1 million PPP loans totaling $196 million. For most borrowers, the loan can be for up to 2.5 times your monthly payroll expenses, giving you a lifetime total of 5 months worth of payroll expenses through the program. If you have an unresolved issue on your first draw PPP loan, move quickly to identify the additional documents requested and supply them to your lender. Nexia International Limited does not accept any responsibility for the commission of any act, or omission to act by, or the liabilities of, any of its members. Second Draw PPP Loan Application and Documentation Requirements. Most small-business clients exhausted most, if not all, of their Paycheck Protection Program (PPP) loan proceeds before the end of 2020. A second draw PPP loan works almost identically to a first draw loan. This is because the SBA is prioritizing the disbursement of second draw loans. Despite the issues that applicants are currently facing with regard to applying for and receiving PPP 2.0 loan disbursement, from Jan. 11 to Jan. 31, the SBA had already approved nearly 900,000 loans totaling $72.2 billion. The New York permit number is 64508. : 5000-20092 EFFECTIVE: February 10, 2021 This Notice revises the guidance provided in SBA Procedural Notice 5000-20083, SBA Paycheck Protection Platform Procedures for Addressing Unresolved Issues on Borrower First Draw PPP Loans, effective January 26, 2021. We can provide insight and assistance at each stage of the PPP loan process, from origination to forgiveness. If a borrower applies for a second draw loan using a new lender and has hold code(s) on the first draw loan, the new lender must resolve the hold code(s) and the first draw lender may reach out to the second draw lender as to how the hold code(s) was resolved during the forgiveness process. When applying for the Second Draw PPP Loan a borrower will need to complete Form 2483-SD (not released as of 1/8) to their lender. Additionally, it must supply guidance addressing access to capital issues for underserved communities. Eligible entities may qualify for a second PPP draw if they meet the following criteria: The entity received a First Draw PPP loan during a previous round. $15 billion for first- and second-draw PPP loans for lending by Insured Depository Institutions, Credit Unions, and Farm Credit System Institutions with consolidated assets of less than $10 billion; 2. The reality is that the demand for PPP 2.0 loans is much less than the first time around because of the gross receipts requirement. SBA Issues New Guidance on First and Second Draw PPP Loans. The SBA can then take time to review the documents and conclude on resolution. But even though we’ve dug through the legislation and emersed ourselves in webinars and town hall meetings, we still have questions. However, lenders are unable to resolve “Internal SBA Hold that cannot be cleared at this time – Details Not Publicly Available,” which may need to be addressed by the SBA. It appears the TIN and SSN are both correct in etran. Like other PPP loans, the interest rate for all second-draw PPP loans is set at 1%, and no personal guarantee or collateral is required. If a lender chooses to proceed through the lender certification process, it can use SBA table 1 (see page 6), to identify the required additional support based on the codes triggered. If your first draw PPP loan has an unresolved issue, it could slow processing for a second draw loan or for first draw loan forgiveness. A certification process whereas table 2 codes require SBA review draw loan of! It out due to this being a brand-new program though we ’ ve dug the. Legislation and emersed ourselves in webinars and town hall meetings, we still have questions kicking! 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