Reasons Why You Might Still Be Waiting On Ppp Loan
Sheer volume is the biggest reason. Lenders have received millions of applications collectively in the first 3 weeks of the program.
While many lenders spent the time to automate processes and increase their throughput, many have not and may be doing manual review.
If your application was put in “manual review” chances are it’s in a queue waiting to be looked over. Here’s basically how it works:
Many lenders put in automated steps to cover most cases during the application process automatically verifying supporting docs, having a systems of flags to pass people through internal checks, and more.
However, if you had a special circumstance, or even just a circumstance that wasn’t covered in a lender’s automation you may have likely been put in a manual review pile.
Ive Been Approved For My Ppp Loan: How Long Before I Get My Money
The SBAs rules say they must fund approved PPP loans within 10 calendar days from the date of approval, although if the borrower hasnt provided correct information then it can be up to 20 days. However, if day 10 falls on a weekend and/or bank holiday, then its the next business day. So it can be between 1013 days and 20-23 days. From the reports were seeing from the small businesses and independent contractors weve helped get funding, the PPP is generally pretty good about meeting or beating that deadline.
Application Dates For A Round 3 Ppp Loan
As noted above, applications for Round 3 first draw PPP loans from approved community financial institutions started on Mon., Jan. 11, 2021. Second draw applications began on Wed., Jan. 13, followed by first- and second-draw loans from small lenders with less than $1 billion in assets on Fri., Jan. 15, 2021. All SBA 7 lenders were approved to accept first and second draw applications starting on Tues., Jan. 19, 2021.
Beware of scammers. Just as with the first two rounds, if you are a small business owner you can anticipate hearing from scammers promising to help you obtain a PPP loan. Only go through approved lenders or the SBA.
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How Is My Ppp Loan Amount Calculated
The SBA has issued specific instructions for how all PPP lenders must calculate the loan amount.
If this is your second PPP loan, and your business is not a restaurant or hotel, the PPP loan amount will be equal to your verified average monthly payroll on file from your PPP loan application x 2.5. For businesses that are restaurants or hotels, the PPP loan amount will be equal to your verified average monthly payroll on file from your first PPP loan application x 3.5.
I Am Planning To Sell All Or Part Of My Interest In My Company Or Merge My Company With Another Company Or Sell Some Or All Of The Assets Of My Company To A Third Party Before My Ppp Loan Is Forgiven Or Paid In Full Do I Need To Notify Bank Of America Or The Sba
The SBA published a Procedural Notice on Changes of Ownership on October 2 which is available on the SBA website. This notice requires, in most situations, that the PPP lender provide confirmation to the SBA of your satisfaction of the requirements set forth in the Procedural Notice. Please contact your small business banker or call us at 866.457.4892 as soon as possible, but at least 10 business days before the proposed date of the sale or merger, so that we can provide assistance in setting up an escrow account if needed and answer other questions you may have as you go through this process.
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Why Does The Sba Take So Long To Approve My Ppp Loan
The American Institute of CPAs sent a letter to the Small Business Administration on February 3, 2021 urging it to correct the processing errors and delays that small businesses are experiencing with the current Paycheck Protection Program loan application system.
PPP loans have proven to be a critical lifeline for the millions of small businesses and not-for-profits that struggle to stay open and retain employees. As close advisers to these organizations, the CPA community has a unique view into problems with the current PPP application system, said Barry Melancon, CPA, CGMA, AICPA president and CEO. We appreciate the SBAs continued efforts to restore Main Street Americas economies. However, there are significant operational, system and communication challenges that must be quickly addressed for PPP to succeed as intended.
Specifically, the AICPA letter outlines the following problems small businesses, and the CPAs who advise them, face in applying for the current round of funding for first- and second-draw PPP applications:
Gathering Documents To Speed Up The Sba Loan Approval Process
Much of the waiting time spent during the SBA loan approval process possibly up to 30 days youll spend gathering documentation for the lender to process. Luckily, the SBA conveniently outlines this for you in this checklist.
After youve applied, it can be another few weeks before you receive a decision. This extra SBA loan processing time is because the lender must weigh details ranging from the loan amount to the purpose of the financing.
Once youre approved for the loan, be prepared to wait some more. There will likely be more documents for you to fill out as things are finalized in this part of the SBA loan closing process. From there, by the time the documents are processed, and the lender sends the funds to your account, it could be yet another couple of weeks before the money arrives.
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Why Wait For The Longer Sba Loan Processing Time
You may be wondering what the benefits of an SBA loan are, especially if youve got to wait for it. Chief among the pros of an SBA loan is youre not giving anything up. As a business owner, you can borrow anywhere from $500 to $5.5 million.
Another attractive feature is the long-term nature of the products. For example, some repayment terms extend for more than two decades . The SBA also caps the amount borrowers should repay in interest. The longer-term combined with the cap translates into a lower interest rate for business owners like you when cash flow is tight. The SBA loan approval process is a bit of a waiting game, so lets get to it.
What Will The Requirements Be For A Second Draw On A Ppp Loan
If you received a PPP loan during one of the early rounds and need additional funding, you may apply for a Second Draw if you meet the following requirements:
- Your business has fewer than 300 employees.
- You can show a 25% revenue reduction during the first, second, third, or fourth quarter of 2020 .
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How Does The Economic Aid Act Signed Into Law On December 27 2020 Change The Process For Economic Injury Disaster Loan Advance Deductions
The Economic Aid Act repealed the deduction of EIDL Advances from loan forgiveness amounts. According to guidance from the SBA:
- The SBA will no longer deduct EIDL Advances from forgiveness amounts remitted to lenders, effective December 29, 2020
- For those loans where SBA has already deducted an EIDL Advance from a forgiveness remittance submitted to a lender, the SBA will automatically remit a reconciliation payment to that lender for the previously-deducted EIDL Advance amount, plus interest through the remittance date
- Bank of America will apply any reconciliation funds received from the SBA due to a previously-deducted EIDL Advance to the balance of the impacted PPP loan and communicate updated balance and payment information to the client
- To the extent you have repaid your outstanding PPP, which included a previously-deducted EIDL Advance amount, Bank of America will refund you this amount upon receipt of reconciliation funds received from the SBA
If Not A Lender What Is Lendios Role With Ppp
We match qualified borrowers with SBA-approved lenders. Our single online application makes it easy to apply to our network of SBA-approved lenders. Once a borrower applies for a PPP loan, we work with them to ensure that the application has everything it needs to be deemed complete by the SBA, match the borrower with an appropriate lender, and then the lender takes care of the rest.
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Second Draw Loan Qualifications
One unique aspect of this round of PPP funding is that you can apply for a second time. These second draw loans have a and are meant for those that have, or soon will, exhaust all the funds from their original loan.
Your business qualifies for a second draw PPP Loan if
- Your small business, nonprofit, veterans organization, agriculture coop, sole proprietor, or other eligible organization has less than 300 employees.
- You must have used or have a plan in place to use your original PPP funding.
- Your business must have at least a 25% reduction in revenues in at least one quarter in 2020 compared to that same quarter in 2019.
The 25% reduction in revenue is the part you need to focus on. You need to make comparative reports that dont include funding from the original round of PPP. Additionally, if youre only seeking a loan of $150,000 through the same lender you worked with the first time, you may not need to provide quarterly revenue information.
How Long Does It Take To Get An Sba Express Loan
Of course, situations arise in which you just cant wait that long. In cases where emergency funding is needed, you may be interested in the SBA Express Program. Its a slimmed-down version of the 7 product in that you can only borrow up to $350,000. But, this lends itself to faster SBA loan approval times.
The SBA promises a turnaround time of 36 hours for their express loans. But, that doesnt include the time it takes for the lender to approve the loan, which could tack on another few weeks. So, instead of 60-90 days, youre looking at 30-60 days for the SBA loan processing time when all is said and done.
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Can A Borrower Make Multiple Draws From A Ppp Loan To Extend The Eight
No. The lender must make a one-time, full disbursement of the PPP loan within ten calendar days of approval. This is important because the eight week period of time for which certain expenses are eligible to be forgiven begins on the date the loan is received.
The U.S. Small Business Administration may provide further guidance, if needed, through notices that will be posted on the U.S. Small Business Administrations website at www.sba.gov. This information is accurate as of April 29, 2020. Questions on the Paycheck Protection Program may be directed to the Lender Relations Specialist in the local SBA Field Office. The local SBA Field Office may be found at .
This information was taken from:
Determine Eligible Expenses Youll Cover With The Ppp Loan
Make sure your business can use the PPP money appropriately so that you can ask for forgiveness. Some businesses have large rent or mortgage payments and would use more than 25% of the PPP loan for rent and or mortgage. Other businesses may have already laid off or furloughed employees, and it may not make sense to bring those employees back. But it could be just what your business needs to receive loan forgiveness.
If you have not yet put together a profit and cash flow forecast to understand your current financial situation, and how the PPP loan would help , now is the time.
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Contact Your Bank Or Lender
Each lender has its own policies surrounding how PPP loans are tracked, so you will need to contact your specific lender directly for more information. Fortunately, though, many banks and lenders have provided online information and portals to make tracking your PPP loan quick and easy. Heres what to expect from some of the biggest lenders participating in the PPP program:
Each PPP lender will have a somewhat different process for checking the status of your loan application. Asking your lender about the status of your application through normal processes such as contacting a bank branch directly or contacting a customer care center may not work due to the volume of applications being processed. Instead, youll have to follow the specific instructions of your bank or lender concerning PPP loan applications.
Unfortunately, Ive seen reports from business owners who have not been provided any means of checking on the status of their PPP loan application by their lender. If this happens to you, keep trying to contact your lender about the matter through any channel the lender provides. You may eventually find someone who can point you in the right direction.
How Does Sba Loan Turnaround Time Compare To Other Types Of Business Loans
Weve established that SBA loans can take up to 90 days or longer to be approved and released to small businesses. In comparison to other business loans, this is quite a lengthy process. When applying for a traditional business loan at a bank, you can expect to get an answer within only two to four weeks. An even faster option is an online business loan. Online resources, although more expensive than an SBA or a bank loan, boast short applications that take minutes and can provide funding within as little as 24 hours.
The appeal of an SBA loan, of course, is not that it is quick or simple but that it is guaranteed in amounts up to 85%, and often offers low rates and long terms.
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Received A Contract But Not Funded Yet
If you have received and signed a contract, but it hasnt been funded, there could be a few reasons. Your application may have errors on the contract, including the wrong name, wrong bank routing number, or incorrect bank account number. Its also possible your application hasnt passed the lenders quality control review.
As financial institutions and fintech providers across the country work diligently to process these loans, we implore applicants to proactively supply as much documentation as possible. We know how badly you and your employees need these relief funds, and we want to help you get funded as expeditiously as possible. Thankfully, money remains in the program and with the recently-passed extension, lenders can continue to push applications across the finish line until the funds are exhausted.
Speed Up The Process With An Sba Express Loan
Even when the SBA loan sounds ideal, the SBA loan process can be very long. Thereâs where the SBA Express loan comes in. You can sort of think of it as the little sibling to the SBA 7 loan.
You can use the Express loan just like a regular SBA 7 loan, but the application process is faster. The Express loan is only backed by a 50% guarantee by the SBA âwhich means youâll need to provide fewer documents and less paperwork. And that could shave off two to three weeks from the SBA loan timeline.
SBA Express loans max out at $350,000 and can take the form of either a term loan or an SBA line of credit. Theyâre more expensive than standard SBA loans because the guarantee isnât as high, so the lender will offer less ideal terms.
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Determine The Amount You Are Eligible For
The maximum amount you qualify for is based on your average monthly payroll times 2.5. If youre in the hospitality industry, such as restaurants and hotels, you can actually qualify for three and a half months of payroll costs, up to $2 million. Take your average monthly payroll and multiply it by 3.5 times.
Depending on if you apply through your bank or an SBA-approved fintech lender, this may or may not be calculated for you. Be sure to ask about receiving a CARES Act Report to help simplify this process.
What About Sba Express Loans
Are Express loans actually faster than regular SBA loans? In short, yes. The downside is that, while the processing time is much quicker than other SBA loans, the maximum loan amount is low at $350,000. The Express loan is typically approved by the SBA within 36 hours, making it the fastest SBA loan application process. However, the approval from the partnered bank could take several weeks, which means that the total time to funding could be one to two months, depending on the lender. Still, this is at least a month faster than most other SBA loans.
As with other SBA loans, you will also need to prepare a comprehensive loan application package to apply for the Express loan. This process, of course, will take some time, though Express loans require fewer documents compared to a 7 loan. Required forms for an Express loan include a Borrower Information Form and a Statement of Personal History. If more than $10,000 in loan funds will be used for construction, youll also need to fill out an Agreement of Compliance. The Express loans issuing bank should provide direction on how to put together the application package and help you work through the process as needed.
Another thing to know about Express loans is that because the SBA backs only 50% of an Express loan loan), interest rates on Express loans tend to be somewhat higher.
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