In case you missed it, over the next several weeks we are taking the opportunity to answer PPP, subsidy, and forgiveness questions submitted by YOU!
To kick it off, we are starting with the following questions received over the last couple of weeks.
Question #1: We need a clear explanation on all codes being issued on loans. What is the difference in these three codes and what can a lender do to clear these issues and when will a lender know that the loan is NOT eligible? SBA has been issuing all different codes and we are really confused.
1. Denied
2. Not Approved
3. Not Clear
Answer: This question was generally addressed in Procedural Notice 5000-20092 issued on February 10, 2021 and the Unresolved Borrower Resolution Process for Second Draw PPP Loans guidance. However, unfortunately, some of these codes have still not been directly addressed in issued guidance. As mentioned in the Procedural Notice, “[s]ome First Draw PPP Loans will have Hold Codes that cannot be resolved [by the processes listed in the procedural notice]. In those cases, the platform will display one of two messages as appropriate: (1) ‘Internal SBA Hold – Details Not Publicly Available,’ or (2) ‘Internal SBA Hold that cannot be cleared at this time – Details Not Publicly Available.’ For the ‘Internal SBA Hold – Details Not Publicly Available’ message, the Lender may contact SBA through the platform Inbox to receive instructions on steps the Lender may take to assist SBA with resolution of the issue. For the ‘Internal SBA Hold that cannot be cleared at this time – Details Not Publicly Available’ message, no further action can be taken by the Lender.” SBA has stated that it will provide additional instructions in the user guide on the platform, and we expect to see additional direction to be forthcoming.
Question: I am disbursing today on a First Draw PPP loan to a Schedule C individual. How long do we need to wait to submit the Second Draw draw application? Same question for a Schedule F farmer.
Answer: SBA actually does not require an amount of time that must pass between a borrower’s first-draw and second-draw loan application. The only time period requirement here is that the borrower must certify that it has used, or will use, the full amount of the First Draw PPP Loan on or before the expected date on which the Second Draw PPP Loan is disbursed to the borrower (per the Second Draw IFR and the Second Draw Borrower Application SBA Form 2483-SD).
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This article is provided for general information and educational purposes only. It does not solicit, establish, or continue an attorney-client relationship. The contents should not be construed as legal advice or opinion. If you have matters or questions to be resolved for which legal advice may be indicated, you are encouraged to contact a lawyer authorized to practice law in the state for which you are investigating and/or seeking legal advice.
