December 7, 2022

Small Business

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AICPA Urges the Modest Company Administration to Handle Tiny Businesses’ Considerable Issues with PPP Bank loan Application System

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WASHINGTON–(Small business WIRE)–Feb 3, 2021–

The American Institute of CPAs (AICPA) these days sent a letter (hooked up) to the Little Company Administration (SBA) raising considerations about the issues small organizations are experiencing with the current Paycheck Defense Program (PPP) bank loan software method.

“PPP financial loans have demonstrated to be a significant lifeline for the tens of millions of compact businesses and not-for-earnings that wrestle to remain open up and retain employees. As near advisers to these corporations, the CPA community has a unique watch into difficulties with the recent PPP software technique,” said Barry Melancon, CPA, CGMA, AICPA president and CEO. “We take pleasure in the SBA’s continued endeavours to restore Most important Avenue America’s economies. Even so, there are sizeable operational, procedure and communication troubles that ought to be immediately dealt with for PPP to do well as intended.”

Exclusively, the AICPA letter outlines the next complications compact companies, and the CPAs who suggest them, experience in implementing for the latest spherical of funding for initial- and next-attract PPP applications:

1. Issues with Attract 1 & Attract Two applications remaining denied acceptance into E-Tran method:

AICPA’s letter acknowledges the essential, added checks that have been set in area to handle fraudulent apps. Nevertheless, it adds, “these validation checks are producing tens of thousands of reputable programs to be denied acceptance by the SBA. Loan providers and financial loan candidates do not fully grasp the procedure to solve these declines, developing terrific anxiousness and confusion for small company proprietors.”

For example, some apps have been denied since the business operator was incorrectly informed that he has a prison file. AICPA’s letter requests that “the SBA deliver more facts on this validation procedure and appropriate some of these program concerns as an urgent priority. In addition, to minimize anxiety and confusion, modest organizations would benefit enormously by currently being extra obviously educated that their preliminary acceptance in the SBA E-Tran program could take extra than a 7 days by using wide communications about the software.”

2. SBA processing and resolution delays for purposes successfully submitted into E-Tran technique:

AICPA’s letter also cites confusion around the more than 40 various “error codes” linked to SBA E-Tran technique validation checks.

“For example, one of the new demands for Draw 2 sole proprietor programs is to use an EIN range in its place of their SSN, even even though quite a few utilized their SSN with their first PPP application. This new prerequisite is creating the software to be declined, considering the fact that one of the acceptance validation checks is to affirm the very same range as the unique PPP application. The total prime purpose for decline is discrepancy with Applicant Tax ID, and the methods to accurate this situation do not look to be performing in most scenarios. For instance, the system appears to report faults even in circumstances where by the borrower made use of the exact EIN on each programs and can exhibit this truth to the lender,” says AICPA’s letter

AICPA requests that the SBA “provide more clarity and, even far more importantly, talk publicly that almost just one 3rd of all applications are getting these requests for additional assessment which could delay processing by a 7 days or much more.”

3. SBA capping of PPP Attract Just one and Attract Two financial loan amounts:

AICPA is informed that the SBA’s mortgage processing method has place in place a mortgage eligibility amount of money cap of $35,000 for each worker for equally Draw 1 and Attract Two apps. Because this cap outcomes in the SBA E-Tran system cutting down the accredited mortgage amounts back to creditors, AICPA urges the SBA to “provide obvious steering related to these PPP financial loan caps that is commonly communicated. Modest enterprises are confused when their loan total is diminished with no rationalization.”

4. Broad interaction on available funding, in general processing and timing.

Last of all, AICPA’s letter states, “that broader conversation from the SBA that there is ample funding to support all Draw Just one and Attract Two personal loan requests, together with distinct interaction that processing time could be one to two months due to the greater validation checks and reviews, will considerably cut down stress with compact enterprises.”

About the American Institute of CPAs

The American Institute of CPAs (AICPA) is the world’s most significant member association symbolizing the CPA job, with much more than 431,000 associates in the United States and globally, and a background of serving the general public interest due to the fact 1887. AICPA associates signify several spots of exercise, including business enterprise and market, public exercise, govt, training and consulting. The AICPA sets moral benchmarks for its users and U.S. auditing benchmarks for private organizations, nonprofit businesses, and federal, state and community governments. It develops and grades the Uniform CPA Evaluation, offers specialised qualifications, builds the pipeline of long run talent and drives professional competency development to progress the vitality, relevance and good quality of the job.

February 3, 2021

Ms. Tami Perriello
Acting Administrator
U.S. Smaller Small business Administration
409 3 rd Road, S.W.
Washington, DC 20416

Dear Acting Administrator Perriello:

Thank you for your continued efforts on the Paycheck Protection Method (PPP), which has served millions of compact enterprises and not-for-gains by furnishing a great deal wanted help at this critical time. The 44,000 CPA firms the AICPA represents have performed a significant position in assisting thousands and thousands of tiny business enterprise purchasers associated to the PPP.

We would like to share some of the most major challenges that modest businesses are enduring in making use of for the recent round of funding for initially and next draw PPP applications. There are a amount of incredibly considerable operational alterations to the PPP by the SBA which are not completely comprehended, as effectively as some system and procedure issues which require to be resolved in get to successfully present important relief to eligible companies.

Some of these items can be dealt with by way of extra conversation from Treasury and SBA, though other people will need SBA process and system enhancements linked to the E-Tran and PPP Financial loan Processing technique.

1. Issues with Attract One particular & Attract Two programs staying denied acceptance into E-Tran program:

We understand a quantity of additional validation checks have been set in put to handle fraudulent candidates. On the other hand, these validation checks are resulting in tens of 1000’s of respectable applications to be denied acceptance by the SBA. Loan companies and mortgage candidates do not have an understanding of the approach to solve these declines, developing great anxiety and confusion for tiny small business house owners.

It seems that there are some program/software concerns which are creating these declines. For instance, in a lot of cases the compact business proprietor is becoming incorrectly educated that they have a felony file. Even right after redoing this certification, debtors might then continue to be declined on the same software thanks to an additional incorrect validation rule (for occasion, an Applicant Tax ID concern).

Total, the method for resolving these software declines is unclear to smaller enterprise proprietors and their lenders. Small business proprietors are getting stunned by these requests from lenders that are driven by the SBA procedure.

We ask for that the SBA give much more information on this validation system and proper some of these procedure issues as an urgent precedence. In addition, to cut down nervousness and confusion, compact businesses would profit greatly by being a lot more obviously knowledgeable that their first acceptance in the SBA E-Tran program could take a lot more than a week by using broad communications about the method. Simply because these validation checks are new, a lot of applicants do not fully grasp the probable change in the timeline for funding, significantly if their software encounters processing errors.

2. SBA processing and resolution delays for programs successfully submitted into E-Tran process:

We recognize that there is a diverse SBA overview process for Attract One particular and Draw Two Apps after they are submitted to the SBA. All round, it appears that 20-30% of all properly submitted programs into the SBA E-Tran program are becoming flagged for supplemental evaluate dependent on validation checks related to these processing regulations.

There are around 40 different “error codes” related to these added information requests. For illustration, a single of the new necessities for Draw 2 sole proprietor programs is to use an EIN selection rather of their SSN, even even though many utilised their SSN with their initial PPP application. This new need is creating the application to be declined, given that a person of the acceptance validation checks is to confirm the exact variety as the original PPP software. The general best explanation for decline is discrepancy with Applicant Tax ID, and the techniques to appropriate this problem do not feel to be performing in most situations. For occasion, the system appears to report problems even in situations exactly where the borrower used the exact EIN on the two programs and can exhibit this reality to the financial institution.

The procedure for resolving these “error codes” is unclear and smaller company proprietors are being shocked by acquiring these requests from loan providers. We ask for the SBA provide additional clarity and, even a lot more importantly, talk publicly that nearly a person third of all programs are obtaining these requests for additional critique, which could hold off processing by a 7 days or much more.

3. SBA capping of PPP Draw A single and Draw Two bank loan quantities:

We are informed that the SBA’s loan processing program has set in position a mortgage eligibility volume cap of $35k per worker for the two Draw A single and Draw Two apps. This cap benefits in the SBA E-Tran system lowering the permitted loan amounts back again to loan companies. Make sure you give apparent assistance linked to these PPP financial loan caps that is broadly communicated. Smaller companies are baffled when their bank loan sum is reduced with no explanation.

4. Broad interaction on out there funding, over-all processing and timing.

We also think that broader communication from the SBA confirming that there is adequate funding to aid all Attract A single and Draw Two personal loan requests, together with crystal clear conversation that processing time could be a single to two weeks due to the increased validation checks and assessments, will greatly cut down stress and anxiety with compact firms. It is been beforehand mentioned that the $284.5 billion allotted by Congress is considered to be sufficient to see the application by means of to its summary on March 31, 2021. Reiterating this statement in a broader public context would considerably reduce stress amid enterprise entrepreneurs.

Thank you for your ongoing do the job on PPP to be certain this help reaches all those tiny firms and non-profits desperately in will need of economic reduction. The AICPA and our customers continue to be deeply fully commited to ensuring the achievements of this application, and we welcome even additional open up and considerable general public-personal coordination on these matters.

Sincerely,

Barry Melancon, CPA, CGMA
AICPA President and CEO

cc: Secretary Yellen
The Honorable Nydia Velazquez
The Honorable Blaine Luetkemeyer
The Honorable Ben Cardin
The Honorable Marco Rubio

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Resource: The American Institute of CPAs (AICPA)

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PUB: 02/03/2021 10:34 PM/DISC: 02/03/2021 10:34 PM

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