The Small Business Administration (SBA) issued revised Borrower Application Forms for Paycheck Protection Program (PPP) borrowers. It also issued a procedural notice informing SBA employees and PPP lenders of new procedures to address SBA Hold Codes on first draw PPP loans and SBA Compliance Check Error Messages on first draw and second draw PPP loans.
On February 10, 2021, the SBA issued a procedural notice (Notice) informing SBA employees and PPP lenders of new procedures to address:
Second draw PPP loan (Second Draw PPP Loan) guaranty applications with an SBA hold code (Hold Code) on the borrower’s first draw PPP loan (First Draw PPP Loan).
First Draw PPP Loan guaranty applications and Second Draw PPP Loan guaranty applications with SBA compliance check error messages (Compliance Check Error Messages).
Hold Codes and Compliance Check Error Messages
The SBA screened all First Draw PPP Loans made in 2020 for potential noncompliance with PPP loan eligibility requirements, fraud, or abuse. It placed Hold Codes on certain 2020 First Draw PPP Loans where potential issues were indicated.
In addition, in 2021, the SBA is conducting initial front-end compliance checks on PPP lender loan guaranty applications for new First Draw PPP Loans and Second Draw PPP Loans. If an issue is identified, a Compliance Check Error Message is generated, which, in many cases, identifies the same issue as the Hold Codes.
The Notice outlines the procedures that will be taken when Hold Codes and Compliance Check Error Messages are present. It also provides PPP lenders with methods for assisting the SBA with the resolution of Hold Codes and Compliance Check Error Messages.
Revised Borrower Application Forms
On February 17, 2021, the SBA issued revised borrower application forms for PPP loan borrowers: