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It’s taking much longer than anticipated to get Paycheck Protection Program (PPP) loans approved and into the hands of businesses. According to, there are two reasons for the delays: The Small Business Administration (SBA) is struggling to review a massive number of applications, and banks are worried about getting stuck with bad debt by approving fraudulent applications.

As writer Neil Hare explains, the government streamlined the application process in hopes that the loans could be processed quickly and businesses could get much-needed funding to continue to pay their employees.

“(SBA Administrator Jovita) Carranza stated that banks have held up disbursing funds as they wait for more clarity on loan guaranties and other regulations around the CARES Act,” Hare writes. “Banks are concerned about fraud as they claim the PPP loans don’t require the usual amount of background information or creditworthiness that come with conventional loan applications.”

He reported that former Fed Chair Janet Yellen told members of Congress this past week that banks need a “safe harbor” to protect them against fraud claims.

Additionally, the program has overwhelmed the SBA, which must review each application before dispersing funds to a participating bank. As Hare explained, the SBA has received some 250,000 applications for the $349 billion program. Typically, the agency will see about 1,000 loan applications in an entire year.

The bottom line is, the government needs to address the concerns of banks and improve the loan process before the money will start flowing. So what should businesses do?

“If you haven’t yet done so, apply for the PPP loan, but figure out another short-term solution for keeping your business going before the money finally arrives,” said Hare, who is president of Global Vision Communications.

PPP was one of several financial aid programs in the Coronavirus Aid, Relief, and Economic Security (CARES) Act. It allocates $349 billion nationwide primarily to allow businesses that have either closed or severely restricted their operations to continue to pay employees with little or no revenue coming in. Learn more about the application process in the Grants and Loans section of NJBIA’s Coronavirus Resources page.

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