Unresolved Borrower Resolution Process for Second Draw PPP Loans

Summary

Guidance titled Unresolved Borrower Resolution Process for Second Draw PPP Loans. It states that when a lender submits an application for guaranty of a Second Draw PPP Loan and the borrower's First Draw PPP Loan is under review, or information in SBA's possession indicates the borrower may have been ineligible, the lender receives notice of an Unresolved Borrower. It states that SBA will not issue a loan number for the Second Draw PPP Loan until the hold codes are cleared, and tells lenders to submit the Form 2483-SD and the First Draw Form 2483. The guidance lists numbered hold codes, including Criminal Record, Bankruptcy, Inactive Business, Mismatch of TIN, Potential Ineligible Business Size and Foreign Country-related entities, each with examples of documents that would help resolve it.

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UNRESOLVED BORROWER RESOLUTION PROCESS FOR SECOND DRAW PPP LOANS
If a First Draw PPP Loan is under review pursuant to PPP rules and/or information in SBA’s possession
indicates that the borrower may have been ineligible for the First Draw PPP Loan it received or for the
loan amount received by the borrower, the lender will receive notification from SBA when the lender
submits an application for guaranty of a Second Draw PPP Loan (‘‘Unresolved Borrower’’).
If you received notice of an Unresolved Borrower due to one or more hold codes that exist on the
borrower’s First Draw PPP Loan, SBA will not issue a loan number for the Second Draw PPP Loan until
the hold code(s) are cleared. To begin the resolution process, please review the information below listed
by hold code, contact the applicant to request the necessary information and documentation, and
submit the information and documentation to SBA following the instructions on the Paycheck Protection
Platform.
Below is a list of hold codes and examples of documentation that will assist SBA in resolving the hold
codes. Please note that these are examples only and do not represent a comprehensive list of
documents and information needed to resolve the hold codes. Depending on the situation, additional
information and documentation may be needed, and if so, SBA will notify you.
For all requests to review Unresolved Borrower hold codes in connection with Second Draw
PPP Loans, please submit a copy of the SBA Form 2483-SD Second Draw Borrower Application
Form (or lender’s equivalent).  Please also obtain and submit a copy of the SBA Form 2483 (or
lender’s equivalent) from the First Draw Loan.

CODE NAME AND DESCRIPTION
1

Criminal Record - Criminal Record identified in public records - Potential eligibility issue

Please provide proof that the borrower (if an individual) and all individuals owning
20% or more of the equity of the borrower do not have a criminal record and/or
provide information and documentation explaining the criminal record:
a. If no criminal record exists:

Provide a statement from each individual, signed and dated, confirming that no
criminal record exists or a background report that demonstrates that no criminal
record exists.

b. If a criminal record exists:

Provide a statement from the individual, signed and dated, that describes the
specific charge, date of the offense, final disposition, and date of disposition and
supporting Court documentation.

2

Bankruptcy - Bankruptcy identified in public records - Potential eligibility issue

Please provide proof that either (a) the borrower and/or owners of 20% or more of
the equity of the borrower never filed for bankruptcy, or (b) that the bankruptcy was
discharged prior to the application date of the First Draw PPP Loan or filed after the
disbursement date of the First Draw PPP Loan such as:
a. Court filings with filing date and discharge date (where applicable)
b. Additional court correspondence
c. Bankruptcy forms and documents
d. Loan transcript showing disbursement date
5
Potential Decedent Application - Owner or Principal of borrower, as entered in ETRAN,
appears to be deceased in public records.

Please provide proof that each owner and principal is not deceased such as:
a. Identity affidavit
b. Current proof of identity including SSN
6
Inactive Business - Borrower is no longer active according to Secretary of State filings or
public records - Potential eligibility issue

Please provide proof that the borrower was in operation as of February 15, 2020 AND
at the time of the application for the First Draw PPP Loan such as:
a. Secretary of State formation filing
b. Filed copy of DBA documents
c. 2020 Tax returns
d. Filed 2019 Tax returns
e. Current bank account statements
f. Current business license verified by issuing municipal authority
g. Current official entity verification certificate from state of registration
h. Copies of paid invoices before & after February 15, 2020
7
Mismatch of TIN (EIN/SSN) - Tax ID of Borrower or Principal, as entered in ETRAN,
appears to be inaccurate

Please provide proof of correct TIN (EIN/SSN) such as:
a. Copy of 2019 Tax Return or other recently filed tax forms verifying the Name and
Tax ID Number for the borrower or principal
b. IRS EIN document
c. Copy of SSN card
8
Mismatch of Entity Name (Individual or Company) - Entity/Individual Name of
Borrower or Principals, as entered in ETRAN, appears to be inaccurate

Please provide proof linking borrower and principal names to TIN (EIN/SSN) such as:

a. Copy of 2019 Tax Return or other recently filed tax forms verifying the Name and
Tax ID Number for the borrower or principal
b. Filed copy of DBA documents
c. Copy of Business License or State License Registration
d. Individual's Driver's License or Official ID
e. Copy of SSN card
9
In Operation After Feb 15,2020 - Public records indicate that borrower either came into
existence after February 15, 2020 or business activity prior to February 15, 2020  was not
detected - Potential eligibility issue
Please provide proof that the borrower was in operation as of February 15, 2020 AND
at the time of the application such as:
a. Secretary of State entity formation filing
b. Filed copy of DBA documents
c. Filed 2019 Tax returns
d. Filed 2020 Tax Returns
e. Bank account statements
f. Business license verified by issuing municipal authority
g. Copies of paid invoices before & after February 15, 2020.

12
SBA Franchise Directory Review - Borrower identified as franchise in Etran but cannot
be identified on Franchise Directory - Potential eligibility issue
Please provide proof either (a) that the borrower is a franchise that is listed on the
SBA Franchise Directory, or (b) that the borrower is not a franchise, such as:
a. SBA Franchise Identifier Code
b. Evidence of operating agreements that demonstrate the business is not operating as
a franchise
15
Potential Ineligible Business Size - Based on information entered in ETRAN - Potential
Ineligible Business Size for First Draw PPP Loan - Number of Employees > 500 – Potential
eligibility issue

Please provide proof of the borrower’s size eligibility for the First Draw PPP Loan such
as:
a. Form 941’s – all four quarters in 2019
b. Payroll tax data
c. Payroll reports/documents
d. If borrower (including affiliates) has more than 500 employees, explanation of why
the borrower is eligible
e. If borrower (including affiliates) has more than 500 employees, verification of NAICS
code accuracy

f. If borrower (including affiliates) has more than 500 employees,  copies of most
recent 3 years Federal Tax Returns
16

Large Number of Employees at Residential Business Address - Borrower address

entered in ETRAN is a Residential Address and Number of Employees >= 100
Please provide proof either that (a) the borrower has an alternate business address
that supports the number of employees; or (b) that the borrower’s operations can be
conducted from the current residential business address such as:
a. Proof of an alternate operating address such as a current utility bill, current
lease/rental agreement, or mortgage note/mortgage statement, and an explanation
of why the alternate operating address was not listed on the application form
b. Signed statement by the borrower explaining how the borrower operations and
number of employees can be supported from a residential address
c. Payroll documentation validating number of employees
d. Proof that the borrower address entered in ETRAN is not a residential address
18
Aggregate Data Mismatch - Identification information provided in Etran cannot be
verified or is found to be associated with a different entity or individual in public records
- Potential eligibility issue
Please provide proof linking borrower and principal’s names to TIN (EIN/SSN) such as
a. Copy of 2019 Tax Return or other recently filed tax forms verifying the Name and
Tax ID Number for the borrower and principals
b. Filed copy of DBA documents
c. Copy of Business License or State License Registration
d. Individual's Driver's License or Official ID
e. Copy of SSN card
21
Employee Count Threshold - Employee Count indicative of concern – Potential eligibility
issue
Please provide proof of employee count and size eligibility for the First Draw PPP Loan
such as:
a. Form 941’s – all four quarters in 2019
b. Payroll tax data
c. Payroll reports/documents
d. If borrower (including affiliates) has more than 500 employees, explanation of why
the borrower is eligible
e. If borrower (including affiliates) has more than 500 employees, verification of NAICS
code accuracy
f. If borrower (including affiliates) has more than 500 employees, copies of most
recent 3 years Federal Tax Return

24
Business Address is Currently Vacant - Borrower address provided in Etran is currently
vacant
Please provide proof either that (a) the borrower has an alternate business address
that supports the active business; or (b) that the borrower’s operations are being
conducted from the current business address such as:
a. Proof of an alternate operating address such as a current utility bill, current
lease/rental agreement, or mortgage note/mortgage statement, and an explanation
of why the alternate operating address was not listed on the application form
b. Proof that the business address listed on the application is not vacant and business
operations are being conducted there such as a current utility bill, current
lease/rental agreement, or mortgage note/mortgage statement
26
Compliance - Marijuana/Cannabis Sales - Borrower appears to be engaged in activities
that are illegal under Federal law (e.g. marijuana/cannabis businesses), state or local law
- Potential eligibility issue
Please provide proof that the borrower is not engaged in the marijuana/cannabis
business such as:
a. Description of the business activities
b. Governing business documents; by-laws, partnership agreement, or corporate
resolution
c. Signed statement by borrower attesting that the business is not engaged in any
activities that are illegal under Federal law (including marijuana or cannabis) or
under state or local law
d. Official corroborating documents such as Business License and/or State License
Registration
28
Compliance - Debarred Businesses - Borrower appears to be suspended or debarred
from participation in Federal programs - Potential eligibility issue
Please provide proof that the borrower is not debarred such as:
a. Documents validating business is not debarred
b. Release of debarment
29
Compliance - Defaulted SBA loan in the last 7 years - Borrower has defaulted and
caused a loss on an SBA loan in the past 7 years - Potential eligibility issue
Please provide proof that the borrower has not defaulted on a direct or guaranteed
business loan (including Federal disaster loans) from SBA and caused a loss to the
government in the last 7 years such as:
a. Current credit report(s)
b. Proof of resolution
30
Compliance - DOL OFCCP Violations - Borrower is suspended or debarred from
participation in Federal programs - Potential eligibility issue

Please provide proof that the borrower is not suspended or debarred from
participation in Federal programs such as:
a. Evidence of Review/Complaint
b. Copies of Investigation and Recommendations, if applicable
c. Documents validating business is not debarred
d. Release of debarment

31
NAICS 522 - Credit Intermediation - Borrower appears to be engaged in lending -
Potential eligibility issue

Please provide proof that the borrower is not involved in lending such as:
a. Verify NAICS Code
b. Description of the business activities
c. Governing business documents; by-laws, partnership agreement, or corporate
resolution
d. Tax Return
e. Company Annual Report
f. Company marketing information
32
Payday Lender - Borrower appears to be engaged in lending - Potential eligibility issue
Please provide proof that the borrower is not involved in lending such as:
a. Verify NAICS Code
b. Description of the business activities
c. Governing business documents; by-laws, partnership agreement, or corporate
resolution
d. Tax Return
e. Company Annual Report
f. Company marketing information

33
Potential Affiliation Issue - Borrower appears to have affiliates. Borrower, combined
with its affiliates, appears to exceed size standards.
Please provide proof that the borrower is either (a) subject to a PPP affiliation
exemption e.g., NAICS code 72, faith-based organization; or (b) combined with
affiliates does not exceed applicable size standard, such as:
a. Addendum A or Faith-Based Addendum
b. SBA Form 3511 Affiliation Worksheet (see Paycheck Protection Platform Resources
page for form)
34

Data Anomaly Issue – ETRAN data is incorrect

Please confirm accuracy of borrower information such as:

a. Correct inaccurate loan information in ETRAN Servicing
b. Tax Return
c. IRS Forms matching the name and TIN (such as Form 941)
35

Research Duplicate 9 Digit Tax ID Issue - Borrower appears to have more than one First

Draw PPP Loan - Potential eligibility issue
Please confirm accuracy of borrower information such as:
a. Verify borrower information with information in ETRAN Servicing
b. Tax Return
c. IRS Forms matching the name and TIN (such as Form 941)
37
SBA - Potential Affiliation Issue - Borrower appears to have affiliates. Borrower,
combined with its affiliates, appears to exceed size standards.
Please provide proof that the borrower is either (a) subject to a PPP affiliation
exemption e.g., NAICS code 72, faith-based organization; or (b) combined with
affiliates does not exceed applicable size standard such as:
a. Addendum A or Faith-Based Addendum
b. SBA Form 3511 Affiliation Worksheet (see Paycheck Protection Platform Resources
page for form)
38
Foreign Country-related entities - Borrower appears to be owned by a foreign
government - Potential eligibility issue
Please provide proof that the borrower is not owned by a foreign government such as:
a. Current tax return
b. IRS tax filing
c. Articles of Organization
d. Secretary of State filing
e. Provide proof that the Applicant is not a business concern or entity (a) for which an
entity created in or organized under the laws of the People’s Republic of China or
the Special Administrative Region of Hong Kong, or that has significant operations in
the People’s Republic of China or the Special Administrative Region of Hong Kong,
owns or holds, directly or indirectly, not less than 20 percent of the economic
interest of the business concern or entity, including as equity shares or a capital or
profit interest in a limited liability company or partnership; or (b) that retains, as a
member of the board of directors of the business concern, a person who is a
resident of the People’s Republic of China.  These entities are ineligible for Second
Draw PPP Loans.
39
State or Local Government - Borrower appears to be a State or Local Government -
Potential eligibility issue
Please provide proof that the borrower is not a state or local government entity such
as:

a. Current tax return
b. IRS tax filing
c. Articles of Organization/Incorporation
d. Secretary of State filing
40

Eligibility – Lobbying - Borrower appears to be a Lobbyist - Potential eligibility issue
Please provide proof that the borrower is not involved in lobbying such as:
a. CPA reviewed financial statements
b. Tax return
c. Borrower disclosure of sources/amounts of revenue
46
Do Not Pay - Death Sources - Owner or Principal of borrower, as entered in ETRAN,
appears to be deceased - Potential eligibility issue
Please provide proof that each owner and principal is not deceased such as:
a. Identity affidavit
b. Current proof of identity including SSN
47
Do Not Pay – SAM - Borrower appears to be on System for Award Management (SAM)
Exclusion list - Potential eligibility issue
Please provide proof that the borrower is not on the System for Award Management
(“SAM”) Exclusion list such as:
a. Verification of ETRAN accuracy
b. Documents validating business is not debarred
c. Release of debarment

48
Do Not Pay - TOP and CAIVRS - Borrower listed in Do Not Pay for delinquent or has
defaulted on federal debt and caused a loss within past 7 years - Potential eligibility
issue
Please provide proof that the borrower has not defaulted on a direct or guaranteed
business loan (including Federal disaster loans) from SBA or any other Federal agency
and caused a loss to the government in the last 7 years, such as:
a. Screenshot of search on U.S. Department of Housing and Urban Development Credit
Alert System (CAIVRS)
b. Verification of ETRAN accuracy
c. Current credit report(s)
d. Proof of resolution

49
Do Not Pay - TOP Education – Borrower listed in Do Not Pay for delinquent federal debt
– Potential eligibility issue
Please provide proof that the borrower is not delinquent on any federal debt, such as:

a. Verification of ETRAN accuracy
b. Current credit report(s)
c. Proof of resolution

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