February 16, 2021
SBA Hot Topic Tuesday – SBA Revises the Procedures for Addressing PPP Hold Codes
When a Lender submits a PPP second draw loan application, the SBA will run the application data through a validation process. That validation process may return a Hold Code or Error Message that requires input from the Lender before the Second Draw loan will receive a loan number from the SBA. In order to make the process of clearing validation messages faster, the PPP Platform was updated last week to allow Lenders to resolve 13 of the most common Hold Codes through a new Lender certification process.
If a Lender receives a Hold Code number 1, 2, 4, 5, 6, 7, 8, 9, 16, 46, 47, 48, or 49, they must obtain from the borrower all information and documentation necessary to resolve the hold and then execute a lender certification from within the PPP Platform. The certification states that the Lender obtained from the borrower all information and documentation necessary to resolve the underlying issues per PPP guidance and that they will provide the SBA with that documentation when they submit a forgiveness decision or guaranty purchase review.
Upon submission of the Lender’s certification—provided that there are no outstanding Hold Codes or Compliance Check Error Messages that require SBA resolution—the platform will automatically move the PPP Second Draw loan guaranty application to the next stage of loan processing without the lender needing to submit any documentation. The Lender submits all information and documentation supporting their certification when they submit a forgiveness decision or guaranty purchase request, whichever occurs first.
If the Lender is unable or unwilling to resolve all of the Compliance Check Error Messages or Hold Codes—except for those that require SBA resolution—the Lender must withdraw the PPP Second Draw loan guaranty application from the PPP Platform.
SBA’s Office of Credit Risk Management (OCRM) will be reviewing random samples of loans where the Lender has submitted a Lender certification in support of a PPP Second Draw loan guaranty application. As part of this review, OCRM will assess whether the lender has retained all appropriate information and documentation in the borrower’s file.
Click here to read the full SBA Procedural Notice on the revised PPP procedures for addressing Hold Codes.