Lenders say many small businesses applying for additional help under the government’s coronavirus relief program are finding that efforts to combat fraud are throwing up obstacles to getting money they need to help stay afloat.
Now, the Small Business Administration, which runs the Paycheck Protection Program, says help is on the way, The Wall Street Journal reports.
The issue is tied to flags the SBA placed on roughly 240,000 initial PPP recipients for everything from clerical errors to indications of possible wrongdoing. Those flags are blocking lenders’ ability to move forward second loans for the borrowers, after the program reopened this month.
“If you’ve got your fraud mitigation hat on, that’s not all bad,” says Tony Wilkinson, chief executive of the National Association of Government Guaranteed Lenders trade group. “But some of these businesses are hanging on by a thread and some of them needed the money yesterday.”
Wilkinson says some of the flags are related to errors with basic data entry. The SBA says it is working to remove the roadblocks. It is holding a national call this afternoon to help participating PPP lenders understand how to resolve the flags.
The agency also plans to issue additional guidance to lenders, and it is telling field offices how to help borrowers and lenders that experience the holdup with second-time applications. Once the flags are resolved, those applications will be given priority in the approval process, an incoming SBA official says. Read the full story.