What should you do if your PPP Application is denied?

The global Coronavirus pandemic has dealt a body blow to the US economy. The confidence of the American consumer has been shaken and stay-at-home orders are forcing many businesses to close their doors to the public. These closures are meant to be temporary, but the financial repercussions will no doubt be long lasting and far-reaching. The loss of income, combined with inescapable financial obligations, will put many small businesses in jeopardy. The brutal truth cannot be ignored. Without emergency funding some companies are going to be facing the very real prospect of permanent closures. 

However, there is some good news for small business owners. The federal government has been quick to respond to the crisis, rushing out legislation intended to provide aid and support for businesses struggling under the weight of the Covid-19 crisis. The Coronavirus Aid, Relief and Economic Support Act (CARES) is meant to address the financial needs of businesses and workers impacted by the current health crisis and hopefully to mitigate the impact of Coronavirus closings on small businesses. 

A major provision of the CARES Act is the Paycheck Protection Plan (PPP), a federal loan program designed to deliver much needed financial support to small business owners so they can continue to cover payroll and other operational costs. For many, a PPP loan will be the difference between survival and extinction. But some business owners are finding it harder to qualify for federal aid than they expected.

Problems with the Paycheck Protection Plan

Hot on the heels of the launch of the CARES Act the Paycheck Protection Plan began to run into some problems. Many business owners were finding the application process difficult to navigate, while others were left unsure whether or not they would even qualify a PPP loan. More troubling still, the initial $350 billion that had been earmarked for the program was soon exhausted, seemingly leaving many applicants out in the cold. 

Fortunately, the Paycheck Protection Plan was quickly refunded by congress, with another $250 billion being pumped into the program. Still, many small business owners are continuing to find applying and qualifying for PPP loans to be a difficult proposition. Some applicants have been denied outright, while others are finding themselves stuck in long processing queues unsure if the limited funding will last long enough to cover their own needs. 

If you have not yet been approved for PPP funding, or you fear your application may be denied, you are not alone. Before you despair, however, there are some things you can do to improve your chances of securing the emergency funding you need to keep your business afloat in these trying times.

Looking to Alternative Sources of Funding With more than $600 billion in disbursable funds the Paycheck Protection Plan is one of the largest loan programs ever undertaken by the federal government. It’s also one of the most popular. But with so many businesses owners competing for funds PPP approved lenders are struggling to cope with long application queues. In many cases the loan processes are being delayed and final disbursements are slow in coming. Moreover, as with any loan program, some applicants are failing to qualify and their applications are being denied. 

If your application to the Paycheck Protection Plan is currently tied up in the review and approval process, or you fear it may be denied outright, there are alternative sources of emergency funding that you may want to investigate. Before you accept a bank balance that is slipping into the red, consider the following funding options for small business impacted by the Coronavirus pandemic:

• Alternative SBA Funding – The Paycheck Protection Plan is far from the only loan program available through the Small Business Administration. In addition to PPP the SBA is also administering Economic Injury Disaster Loans (EIDL), Express Loans and Express Bridge Loans. These loan programs target small businesses and are designed to provide much needed funding in times of financial difficulty.
• Private Sector Funding Resources – While the federal government is the clear leader in providing financial support for businesses, the private sector is also taking steps to aid small businesses in crisis. For example, Goldman Sachs has launched its own Global Stimulus Package, earmarking $525 million in emergency loans for small businesses impacted by the Covid-19 pandemic. Similarly, Salesforce is providing $10,000 grants to for-profit businesses with fewer than 50 employees who face closure due to the current crisis. · State and Local Relief Programs – State and local governments, partnering with community organizations and non-profits, are working to support local businesses adversely impacted by Coronavirus.
• These programs vary greatly according to region and resources available. Business owners who miss out on SBA funding programs should investigate state, local and regional support opportunities.

What Can You do If Your PPP Application is in Limbo? The high volume of PPP applications has resulted in several bottlenecks in the approval process. These inevitable delays mean that many applicants are stuck in limbo, without any clear answers as to whether or not they will receive the financial assistance they need to survive. 

If you have yet to receive a response to your Paycheck Protection application there are a few scenarios that may be in play. First, your lender may have had additional inquiries in regards to your application, and may be in the process of gathering the necessary information needed to make a final determination. It’s also possible that your application was stuck in the queue when the first batch of federal funding ran dry. That added delay has caused many applications to sit waiting for attention, and your loan may simply be waiting to be processed. 

The obvious course of action is to contact your lender and check on the status of your application. Most lenders are currently processing existing applications before accepting any new ones, so if you have already applied you should be able to get an update on your status. If you have difficulties contacting your lender you should reach out to the offices of your local Small Business Administration for further assistance. 

Remember, when checking on the status of your PPP loan application make certain you have all of your paperwork in order before contacting your lender or your local SBA office. Having the necessary documents and data at hand will make the process go much easier.

Should You Apply to Multiple PPP Lenders?

Many small business owners wonder if they can apply to more than one lender for their PPP loan. The short answer is – “yes”. However, you cannot receive multiple loans. When applying to multiple lenders it is important to understand that the first application received and processed by the SBA and its partnering lender will be the only one accepted. Any further applications associated with your business’ tax ID number will be summarily rejected. 

If you have yet to receive an answer to your original PPP application you may find it beneficial to submit applications to other lenders. The SBA website can help you locate active PPP lenders in your community. Once you have identified regional SBA lending partners you can begin to submit your back-up applications. A useful tip to keep in mind is that the second wave of funding has been targeted to smaller banks and SBA lending partners. You may get better results by submitting your additional applications to smaller local banks that may not be handling the same volume of loan requests as their larger national counterparts.

Should You Reapply for PPP if Your First Application gets denied?

Finally, if your application to the PPP program has been denied you can reapply if your original paperwork was incorrect. If any errors were made in your original application you have every right to correct those mistakes and submit a new and updated application. 

However, if your application gets denied because you are judged ineligible to receive funding through the PPP program any subsequent application will likely suffer the same fate. There are no penalties for submitting further requests for funds, but if circumstances on the ground remain unchanged the results will be the same. 

If your application for the Paycheck Protection Plan has been denied speak to your lender to find out why it has been rejected. They should be able to explain why your application has been denied and walk you through any options you may have to locate alternative funding opportunities.

PPP Loans for Small Businesses

The Paycheck Protection Plan is designed to help struggling businesses through these trying times. The second wave of funding is now in place and lenders are once again processing applications for small and mid-sized businesses. If you are in need of support due to the impact of the Coronavirus pandemic now is the time to follow up on any PPP applications. If you haven’t applied for a PPP loan yet and further delays may result in lost opportunities for you and your business. 

For those business owners who have had their applications denied by the Small Business Administration and their partnering lenders do not lose heart. Other funding opportunities are available. It is in your best interests, and the interests of your company and your employees, to search out alternative sources of support for businesses struggling though this national crisis.