Paycheck Protection Program Common Issues with Lenders

The IRA is aware of several issues that restaurants care currently facing as they attempt to apply for Paycheck Protection Program (PPP) loans through local banks.

Senator Marco Rubio, chief co-sponsor of the CARES Act, posted a 13 part thread outlining many of the impediments seen on day one of the PPP program and how they can/will be fixed. See Senator Rubio's comments below:

  1. Day one saw complications you would expect with unprecedented $349 BILLION emergency plan passed just 7 days ago
  2. Despite this as of 6:06 pm Friday 13,669 Small Business owners received PPP loans valued at more than $4.3B. However a number of outstanding issues to address 
  3. On Friday we had various & extensive conversations with SBA & US Treasury about the issues that emerged on day one of PPP loans. I expect that early next week they will be releasing additional guidance that should provide clarity & help resolve many of these issues
  4. First issue is that for now most banks only provide #PPP loans to existing clients because the SBA interim final rule only exempts money- laundering requirements for existing customers. But that makes it difficult for Small Business if they are denied by their bank. 
  5. The good news is multiple FinTechs including PayPal & other online lenders are ready, able & willing to process #PPP loans for them & anyone else. But they need the US Treasury to release applications for nonbank lenders to become certified. I expect that very early next week.
  6. Second issue is that because of requirement in SBA interim final rule that lenders hold loans for 7 weeks before they can be purchased, we will need a purchase mechanism through US Treasury or federal reserve ASAP in order for community banks & FinTech to make #PPP loans 
  7. Third issue is that in order for lenders to confidently participate they need further clarity on SBA affiliation rules for Small Business & 501(c)(3) - Inconsistency on general eligibility requirements for #PPP loans I expect that very early next week as well
  8. Fourth issue is that the SBA interim final rule has contradicting guidance determining whether Small Business owners should include independent contractors 1099’s in payroll cost calculation.
  9. Fifth issue is that In calculating avg monthly payroll to determine #PPP loans amount we need SBA to make clear our intent when writing the bill that gross payroll would be applied to calculation to ensure federal tax withholding & FICA burden isn’t on small business
  10. Sixth issue is that E-Tran, the SBA internal system for loan applications has been slow due to the volume of applications Friday. SBA has contracted with Amazon Web Services to ensure E-Tran system issues are resolved moving forward.
  11. Seventh issue is that some community banks have reported issues with accessing the AWS portal which SBA uses to provide access to non-SBA lenders. We have discussed this also with SBA which assured us they are addressing this problem.
  12. Eighth issue is money. Based on the demand we saw on Day One it is clear we will need more money for #PPP by late May. Our rough estimate is that if 2/3 of the lenders that will participate in #PPP loans aren’t up & running yet,the $349 billion will run out around 6 June.
  13. When you launch something this unprecedented & far reaching, just 7 days after it became law,you are going to have some problems. The GOOD NEWS is every problem we saw on Day One of #PPP loans can be fixed. We will stay on it to make sure it gets better each day forward
Next IRA Webinar: Completing PPP Applications and Troubleshooting
Mark your calendars: the IRA will be hosting our next webinar for restaurant operators on completing Paycheck Protection Program (PPP) applications and troubleshooting next Tuesday, April 7 at 12:00 p.m. (Central).

We are again hosting the program along with the American Business Immigration Coalition (ABIC), National Partnership for New Americans (NPNA), National Restaurant Association, and the Florida Restaurant & Lodging Association.

This is the second webinar in our Paycheck Protection Webinar Series, which will share updates on the federal loan program; detailed information & troubleshooting on the application process; and best practices from small businesses and lenders themselves. 
Topics to be covered include: 

  • Application Process
  • Addressing FAQ from the last webinar 
  • Guidance on Addressing Lack of Access and Denials 
  • Insider Scoop from Lenders & the Small Business Administration 

Click here to register.
Having Issues Applying for PPP Loans? IRA COVID-19 Legal Network Can Help
Several attorneys in the IRA Legal Network are ready to provide guidance to restaurant operators as they apply for relief loans.

Our participating attorneys have also provided FAQs and breakdowns for you to reference.

Click here to visit the IRA Legal Network webpage and list of participating attorneys.
Get Your Documents in Order - COVID-19 Relief Requires Accurate Records

Your access to coronavirus relief will require documentation - the key to any successful business continuity/financial recovery plan.

Whether you plan to apply for a Paycheck Protection Program (PPP) loan, an SBA Economic Disaster Injury Loan (EIDL), or take advantage of the hundreds of grants and short-term loans being made available through local, state, community, and business development sites, you’ll have to fill out paperwork and offer proof of eligibility.

Click here to review the documentation and records you need to have on hand.
Please visit our website for the latest coronavirus updates, in addition to the above resources and information for your business - updated as of 4:45 p.m. Saturday, April 4.