Why is my PPP loan delayed? Some possible causes

In this 3-minute read:

  • Why is my PPP loan delayed?
  • Who is involved in the PPP loan application/approval process?
  • If I did everything right, could my PPP loan still be delayed?
  • If there’s something wrong with my PPP application, will my lender let me know?
  • What are some common SBA/Lender messages regarding my PPP loan?

Womply has now helped over 250,000 small businesses, independent contractors, sole proprietors, and eligible self-employed individuals get PPP stimulus funding, and we’ve just about heard it all. One type of question that comes up on occasion is the issue of a PPP loan application being delayed. Let’s go over some of the fundamentals and attempt to answer these questions.

Who are the parties involved in the PPP loan process?

To understand PPP loan delays, it helps to know who is involved in the process, and what their roles are.

There are three entities directly involved in PPP loans:

1. The borrower

The business or person applying for a PPP loan (example: a self-employed person, an LLC with many employees, a restaurant, a farmer, a non-profit entity, an independent contractor, etc.)

2. The lender

For PPP loans the lender is any SBA-approved institution that receives applications, submits those applications to the SBA, and provides funds to the borrower (example: a bank, credit union, community lender, etc.)

3. The Small Business Administration (SBA)

The SBA is the government agency that administers the Paycheck Protection Program (PPP). They review every application before telling the lender whether the application is approved or rejected.

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Why is my PPP loan taking so long? What are some common causes?

The most frequent cause of PPP loan delays is borrower error. Here are some of the most common problems that could cause your PPP loan to become delayed:

Basic information problems

A common issue causing PPP loan approval delays is providing incorrect information on your application, such as:

  • Mismatched or incorrect business info (addresses don’t match, etc.)
  • Incorrect tax ID (Social Security Number, EIN)
  • Mistake in the PPP First Draw SBA loan number (or missing) when applying for second-draw loans

Problems with incorrect or insufficient documents

We see a lot of loan applications delayed to to borrowers providing the wrong documents, or not enough proof to substantiate their claims of annual revenue or losses, such as:

  • Providing incorrect or insufficient documents
    • Example: a 1099-MISC does not satisfy the requirement for a 1040 with Schedule C for self-employed/independent contractors
  • Incomplete documentation provided
    • Example: a Schedule C alone is not sufficient without your 1040 return
  • Low quality document scan or copy
    • You must provide a high quality digital scan of all documents. If it can’t be read by software then your application will definitely be rejected and could possibly be delayed

Not completing all the required steps

Surprisingly, lots of PPP loans are delayed simply because the borrower got distracted or otherwise neglected to actually complete the full application process and forms, review it, and sign it (usually this is an electronic signature for today’s SBA lenders). You are responsible for making sure you get through the entire process and submit your application form and documentation to your lender.


If I avoided all potential borrower errors, could my PPP loan still be delayed?

While borrower errors are by far the biggest sources of delay, lender delays and SBA delays can sometimes occur. Let’s go over a couple of reasons this can happen.

SBA lender delays

Lender delays to the PPP loan approval process usually occur for the following reasons:

  • The borrower’s application is more complex than typical PPP applications
    • Complex applications take more time and require more scrutiny
    • Alternative documentation from what is requested may also be a source of delay, as the process and alternative documents will need to be approved at several levels
  • The borrower’s application had errors or inconsistencies
    • Many lenders run their own analysis on applications prior to submission to the SBA for approval. Errors at this stage can require back and forth with the borrower to get clarification, and in most cases require the filing of a corrected application
  • The application was rejected by the SBA with a “hold code”
    • The SBA has added new checks to minimize program fraud. Some of these checks mean the application will be cancelled. Others can be corrected, but that requires extra effort by lenders

SBA delays

The SBA must approve every single PPP loan, which means there may be some inherent SBA delays, depending on demand.

Additionally, the SBA was criticized for having an unacceptable rate of PPP fraud in 2020. The changes they instituted this year to prevent fraud have increased the time it takes for them to process loans. As a result, even perfect applications often take a few days once they reach the SBA for approval. If there are errors with the borrower’s application, then these delays can increase significantly.

Go deeper: 5 responses to your PPP loan application and what they mean

If there’s something wrong with my PPP application, will the lender tell me what it is?

An important thing to keep in mind is that lenders must comply with their legal obligations when communicating with borrowers. This can sometimes result in lenders not telling the borrower what went wrong or what to do about it.

Under the law, there’s very little that lenders can tell borrowers about their particular application… even though it’s their application. For example, even if it’s obvious to the lender that a borrower is not eligible for PPP, the lender may not tell them that directly. The lender may not want to incur liability if their conclusion was incorrect. This creates a frustrating experience for borrowers who mistakenly believe they’re eligible but continue to be declined and told by that lender “you may be able to re-apply elsewhere.”

In all cases it’s up to you as the borrower to determine your eligibility, understand the rules, and apply correctly.

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