Why Was My PPP Loan Denied?

You may have been denied for a PPP loan for a number of reasons. Check out this blog post to see if any of these reasons apply to you.

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Reasons for denial

Incomplete or missing information

One common reason for denial is that your application was incomplete or missing information. The PPP loan application asks for basic information about your business, including your business name, EIN, business start date, business type, number of employees, and annual payroll.

If any of this information is missing or inaccurate, it could trigger a denial. For example, if you put down the wrong EIN or put your business start date as the date you submitted the application instead of your actual business start date, that could be enough to get your loan denied.

Be sure to double-check all of the information on your application before you submit it to avoid this common reason for denial.

Insufficient collateral

If your PPP loan is denied, there are a few potential reasons why. One reason may be that you don’t have enough collateral to secure the loan. In order to qualify for a PPP loan, you must have some form of collateral, such as property or equipment, that can be used to secure the loan. If you don’t have enough collateral, the lender may not be willing to extend the loan to you.

Unacceptable use of funds

You may be denied for a PPP loan if the SBA finds that you have used the loan for an unacceptable purpose. Some of the most common reasons for denial in this category include using the loan for:

-Payroll costs that are more than 25% of your total expenses
-Non-payroll costs that are more than 40% of your total expenses
-Any expenses that were incurred before you received the loan
-Any expenses that were incurred after you applied for forgiveness

How to appeal the decision

Request a reconsideration

If you believe there was an error in the decision made about your PPP loan, you can request a reconsideration from the lender.

To do this, you will need to send a letter to the lender explaining why you believe the decision was incorrect. Include any documentation that you have that supports your case.

The reconsideration process can take up to 60 days. If your request is denied, you can appeal the decision to the SBA’s Office of Hearings and Appeals.

Submit additional information

If your PPP loan was denied, you may still be eligible to appeal the decision through the SBA. You will need to submit additional information to the SBA for review, and you should do so as soon as possible.

The SBA will notify you of their decision and provide you with instructions on how to appeal if they deny your PPP loan. You will have 10 business days from the date you receive the denial notification to submit your appeal.

To appeal, you will need to submit a written request to the SBA along with any additional information that you think may be helpful in reconsidering your application. It is important to include as much detail as possible and to be clear about why you believe the decision was incorrect. The SBA may require you to provide additional documentation or information, so be sure to follow their instructions carefully.

Once your appeal is received, it will be reviewed by a different division of the SBA than the one that made the original decision on your loan. The review process can take several weeks, so it is important to submit your appeal as soon as possible.

If you are ultimately unable to obtain a PPP loan through the appeals process, there are other funding options available that may be more suited to your needs. You can explore these options through the SBA or through private lenders.

Tips for increasing the chances of approval

The Paycheck Protection Program is a lifeline for small businesses during the COVID-19 pandemic. If your loan was denied, don’t give up hope. There are a few things you can do to increase your chances of approval.

Review the requirements

The SBA’s Paycheck Protection Program (PPP) loan has very specific requirements, and if you don’t meet them, your loan may be denied. So, before you even apply, review the requirements to ensure that you are eligible.

To qualify for a PPP loan, you must:
– Have been in business as of February 15, 2020
– Have paid employees whom you plan to continue paying during the covered period
– Have a financial need for the loan proceeds
– Use the loan proceeds for eligible expenses, which include payroll costs, rent, mortgage interest, or utility payments
– Be unable to obtain credit elsewhere

Gather all required documentation

One of the most common reasons for denial is simply not having all of the required documentation. The SBA has a very specific list of documentation that must be submitted in order for your application to be processed, and if even one item is missing, your application will likely be denied. Be sure to review the list carefully and gather all required documentation before submitting your application.

In addition to the required documentation, you should also take the time to put together a strong business plan. This should include financial projections and a detailed explanation of how you will use the loan proceeds. A well-prepared business plan will show the SBA that you are serious about using the loan to grow your business and that you have a good chance of being able to repay the loan.

Speak to a loan officer

If you’re not approved for a PPP loan, your lender should provide you with feedback on why your application was denied. If you think there may have been a mistake or if you’d like to appeal the decision, your best bet is to speak to a loan officer. They may be able to help you improve your application or direct you to another funding option.