April 13, 2020 4 min read

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The American Bankers Association reported on April 12 that $205 billion of the $350 billion appropriated for Paycheck Protection Program (PPP) loans has been claimed. This number presumably represents applications that banks have processed and that have been approved through the Small Business Association (SBA). Keep in mind, approval by the SBA occurs before the loans are actually documented and funded.

While some small-business owners have received their PPP funds, the vast majority are still looking for a bank or are somewhere in their bank’s application or funding process. Frustrations are running high amongst small-business owners, but there is hope that the funding of these loans will increase significantly over the next week, as banks who started taking applications early are now moving on to the loan document and funding process. (For an overview of the PPP loan and how it can be forgiven, please refer to my prior article here.)

Related: Entrepreneurs Review the SBA PPA-Loan Application Process

Understanding the Process of Your PPP-Loan Application

The SBA only released model loan documents for PPP loans on Tuesday of last week, and banks have only had a few business days with the model loan docs and have certainly been overwhelmed with applications. After a PPP loan application is completed by the borrower and supporting documentation is provided, the bank then enters the loan into the SBA’s E-Tran system for approval, and once approved, the loan then moves to the bank’s document and funding stage. The critical stage is getting SBA approval from your bank in the E-Tran system, as that is presumably the step where the allocation by the SBA of the $350 billion is occuring.

Keep Shopping If You’re on a Wait List

Many small-business owners are in line somewhere at their bank but have yet to fill out and sign their PPP loan application. This is a tough spot to be in for a few reasons.

First, the CARES Act set aside $350 billion for PPP loans, and the funds are first-come, first-served. Since $205 billion has already been claimed, small-business owners who are still in process need to get their applications in as quickly as possible. While leaders in Congress and the White House have stated that they will provide additional funding for PPP loans if the initial $350 billion runs out, there is no guarantee that additional funds will be provided or whether there will be any new restrictions on those funds.

If your bank has only taken your interest and has yet to reach out to you for an application, follow back up with them and whatever relationships you have there and look at the smaller community banks in your area who have been the early adopters and providers of PPP loans. Make sure you’re at a bank or institution that will accept your application and won’t just put you on a wait list. Unfortunately, many banks have been overwhelmed with applications and resorted to interest forms on their website, and nobody wants to be on a wait list.

Beware Non-Bank, Third-Party Providers That Aren’t Funding the Loan

There are many third-party online providers offering to connect small-business owners with banks that will fund their loan. While these companies can provide a great service and experience, most banks are scrambling to help their existing small-business customers and don’t have the capacity to take on additional PPP-loan applications from third parties. Consequently, you could be waiting in line behind the bank's existing customers and wasting time. If you’re waiting on a third party, ask them which bank is going to fund your loan and press them to make sure your application has been processed with the SBA.

Related: How to Submit Your SBA PPP-Loan Application and Calculate the Loan Amount

The pressure will certainly mount in Congress once the $350 billion in PPP funds have officially ran out. While there are promises of $250 billion in additional funding, that funding still hasn’t been approved by Congress, and most small-business owners who’ve yet to even apply for a PPP loan will be left with less-favorable options of unemployment for themselves and their workers. The PPP loan is an excellent lifeline for small-business owners who are trying to keep workers on payroll, but it’s a lifeline that most small-business owners have been unable to find as the chaos in rolling out this program has left the banks, SBA and small-business owners scrambling.