Work quickly to resolve first and second draw PPP loan issues

During the early roll-out of the Paycheck Protection Program under the CARES Act of 2020, lenders were able to make and approve PPP loans without prior Small Business Administration (SBA) review. After the loan was granted, the ASB then applied an automated filtering tool that used public information and applied eligibility and fraud detection rules to identify non-compliance with eligibility conditions, fraud or abuse, or other anomalies indicating non-compliance. This review resulted in the issuance of hold codes on some 2020 first-draw PPP loans, requiring more information from the lender and the applicant before using an approval number.

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Things changed from 2021 when the SBA began performing front-end compliance checks (before issuing an SBA loan number) for the first and second ready-to-shoot using ‘A modified automated filtering tool and information from the Treasury Do Not Pay Lists. If a problem is identified, the tool generates a compliance check error message which in most cases identifies the same error as the 2020 First Draw PPP Loan Block Codes.

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So what are the consequences of unresolved issues? In accordance with the SBA Interim Final Ruling (IFR) Protection Program Second Draw Loans of January 14, 2021, if a first draw PPP loan has an unresolved issue, which may be due to hold codes or messages compliance check error, notify the lender and no SBA loan number will be issued until the original loan application issue (s) are resolved.

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Note that an unresolved issue does not preclude a borrower from receiving a second drawdown loan, but it may affect the timing of a second funding drawdown to a borrower in economic need, if it is not. resolved in a timely manner.

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For example, if a second Loan Draw borrower request is submitted by a lender and the borrower has the hold code (s) from their first 2020 Draw Loan, then the request will automatically go into search status and platform will provide the lender with an opportunity to resolve the outstanding issue.

Likewise, if a borrower’s request for a first or second drawdown loan submitted by a lender receives a compliance check error message, the request will also automatically switch to search status and the platform will provide the lender the opportunity to resolve the outstanding issue. Once the issue (s) are resolved, loan applications will automatically proceed to the next step in the process and should not require re-entry by the lender.

SBA 5000 Procedure Notice 20092 provides two tables to help you identify additional assistance in resolving deadlock codes and compliance check error messages. Table 1 lists the errors that can be resolved by the lender, while Table 2 lists the codes that require review by the SBA. The SBA also has checks in place to identify duplicate loan applications. Duplicate loans can be triggered if the tax ID number is already used on an application or if an applicant requests more than a first or second draw loan.

Some borrower apps may have suspension codes that trigger one of the following two messages: “Internal SBA Suspension – Details Not Publicly Available” or “Internal SBA Suspension which cannot be cleared at this time – Details not publicly available.” Lenders can contact the ASB through the platform to process “Internal SBA Withholding – Details not publicly available” messages. However, lenders are unable to resolve the “internal SBA block that cannot be cleared at this time – details not publicly available” which may need to be addressed by the SBA.

The imperative for borrowers is to act quickly to identify the additional documents requested and provide them to their lender, who in turn will forward the information to the ASB.

For more information on PPP loan issues in Massachusetts, contact Matthew Rambaran at [email protected] or 267-419-1145. For more information, visit

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Johnnie Hill

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