Note: if you’re looking for Womply PPP loan status definitions, please visit our PPP loan status FAQs.
In this 5-minute read:
- Common responses to the PPP loan from lenders
- What does it mean if your PPP loan application is denied and how can you prevent that?
- What is an automated review of the PPP loan application?
- What is a manual review of the PPP loan application?
- What does it mean if your PPP loan application is submitted to the SBA?
- What happens when your PPP loan application is approved by the SBA?
Many businesses have begun submitting their second (of first) applications for the PPP loan. If you haven’t, you have until May 31, 2021 to do so. As your application is being processed, you may receive a number of different responses that help you to know what stage of the process your application is in.
We’ll walk you through several of these stages so that you understand what they mean, how that impacts your PPP loan, and if there are any additional steps that you need to take.
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Common responses to the PPP loan from lenders
As you submit your PPP loan application, you should be monitoring your email for any messages or requests for follow-up information. Be sure to check your spam folder. You may receive any of the following responses to notify you about which step of the process your application is in at the time:
- Denied
- Automated review
- Manual review
- Submitted to SBA
- Approved by SBA
What does it mean if your PPP loan application is denied and how can you prevent that?
You’ll know if your PPP loan was denied because you should receive a notice from the lender you applied through.
The first thing you should do if your PPP loan is denied is talk to your lender to receive insights as to why this happened. See if they are aware of the reason that your application was denied so you can determine if you are simply not eligible for the PPP loan or if you can resubmit your application.
There are a number of reasons a PPP loan may be denied.
An error was made on the application
Review your application before submitting it to ensure that you didn’t make any errors. Any of the following errors could result in a denial of your loan:
- Incorrect Employer Identification Number
- Inaccurately reported payroll expenses
- Name spelled wrong
- Or any number of errors, typos, or misspellings
If you did accidentally submit your PPP loan application with an error, you can resubmit the application.
You don’t meet lender requirements
The SBA has their own eligibility requirement which must be met in order to obtain a PPP loan, but lenders can add their own requirements on top of that. Be sure to familiarize yourself with any additional lender requirements so that you can get your loan (or find a new lender).
Not having the right documentation (or illegible documents)
You will need a series of different documents to provide verification of the payroll reports and claims that you make on your PPP loan application. You’ll also need to provide proof of identity.
Documents may include:
- IRS tax forms
- Business organization forms (i.e. Articles of Incorporation, business license, etc.)
- Proof of identity (driver’s license, passport)
- Invoices
- Payroll statements
Check out our complete checklist: PPP lender document checklist
As you submit documents and images for your application, be sure that the quality stands so that your lender and the SBA can clearly read and verify the information they need.
Answering yes to any of the following four questions on the application
There are four questions on the PPP loan application that will automatically disqualify you from being accepted for a loan. Answering yes to any of the following questions can result in a “denied” status from your lender:
- Is the Applicant or any owner of the Applicant presently suspended, debarred, proposed for debarment, declared ineligible, voluntarily excluded from participation in this transaction by any Federal department or agency, or presently involved in any bankruptcy?
- Has the Applicant, any owner of the Applicant, or any business owned or controlled by any of them, ever obtained a direct or guaranteed loan from SBA or any other Federal agency that is (a) currently delinquent, or (b) has defaulted in the last 7 years and caused a loss to the government?
- Is the Applicant (if an individual) or any individual owning 20% or more of the equity of the Applicant presently incarcerated or, for any felony, presently subject to an indictment, criminal information, arraignment, or other means by which formal criminal charges are brought in any jurisdiction?
- Within the last 5 years, for any felony involving fraud, bribery, embezzlement, or a false statement in a loan application or an application for federal financial assistance, or within the last year, for any other felony, has the Applicant (if an individual) or any owner of the Applicant 1) been convicted; 2) pleaded guilty; 3) pleaded nolo contendere; or 4) commenced any form of parole or probation (including probation before judgment)?
It’s best to determine if you are eligible to receive the PPP loan prior to submitting the application. You may not want to go through the time and effort of applying if you’re automatically going to be denied. But, if you are in need of capital to help keep your business afloat, there are other funds that you can look to including the EIDL grant program if it’s currently open.
You may be interested in: Emergency funding options for small businesses (2021 update)
Check, and recheck, your application to ensure that you didn’t make any errors, and if you did accidentally submit your application with errors, try correcting your errors and submitting your application again. Errors in the application is the most common reason that the PPP loan application is denied, so work with your lender and try hard to get it right the first time.
What is an automated review of the PPP loan application?
Most lenders use an automated review to process the PPP loan applications they receive. This generally takes 1-3 days, after which you should hear back about whether or not your loan was submitted to the SBA.
What is a manual review of the PPP loan application?
If your PPP loan application status is in “manual review,” that just means that the lender will be manually looking over the application to ensure it is eligible for submission to the SBA. This generally occurs when the application is more complicated or has documents that aren’t easily processed by the automated review. This process takes a little longer, and may be 7 days or longer, but typically the lender can get your loan application reviewed in a few days.
What does it mean if your PPP loan application is submitted to the SBA?
If your application is “submitted to the SBA,” that means your lender has completed their review of your application and moved it along in the process by sending it to the SBA. Due to the number of new loan applications, it is difficult to tell how long the SBA’s review process will take once they receive your application. However, reports we hear lately suggest your lender should hear back from the SBA within a few days of submitting your application.
Your lender should keep you informed and send a notification once they hear from the SBA. They may even give you a timeframe in which you can call back to check in on the status of your application.
What happens when your PPP loan application is approved by the SBA?
When your PPP loan application is approved by the SBA, you will receive notice from your lender of this status update. Once your PPP loan is approved, by regulation you should receive the disbursement of your loan funding from your lender within 10 calendar days.
Once you receive your funds, be sure to use them only on approved PPP expenses in order to receive full forgiveness on the loan.
BONUS: My lender said my PPP loan is being reviewed. What does that mean? (Error E0117)
In some instances the Second Draw loan process may take longer for the SBA to review and approve applications. As a result, some lenders and businesses are getting the following automated message from the SBA:
“You have attempted to submit a PPP 2nd Draw request. Your original First Draw PPP Loan is still under review by the SBA and has associated holds that must be cleared before 2nd draw processing can proceed. We apologize for this inconvenience. To address your specific loan situation, please use the Forgiveness platform Inbox to request escalation of your loan review by the SBA. Error: E0117”
Don’t be alarmed if you get this message. It simply means that the processing and final approval of your loan may take a little longer.
Read our additional FAQs about PPP loan application process.
You may also like: Why is my PPP loan approval taking so long?
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