SBA Procedural Notice: Revised PPP Procedures for Addressing Hold Codes
Summary
SBA Procedural Notice, Control No. 5000-20092, effective February 10, 2021, to SBA employees and Paycheck Protection Program lenders. It revises the SBA Paycheck Protection Platform procedures for addressing hold codes on First Draw PPP Loans and compliance check error messages on First Draw and Second Draw PPP Loans. It revises the guidance in Procedural Notice 5000-20083, SBA Paycheck Protection Platform Procedures for Addressing Unresolved Issues on Borrower First Draw PPP Loans, effective January 26, 2021.
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SBA Procedural Notice
TO: All SBA Employees and Paycheck CONTROL NO.: 5000-20092
Protection Program Lenders
EFFECTIVE: February 10, 2021
SUBJECT: Revised SBA Paycheck Protection
Platform Procedures for Addressing Hold Codes on
First Draw PPP Loans and Compliance Check Error
Messages on First Draw PPP Loans and Second
Draw PPP Loans
This Notice revises the guidance provided in SBA Procedural Notice 5000-20083, SBA
Paycheck Protection Platform Procedures for Addressing Unresolved Issues on Borrower First
Draw PPP Loans, effective January 26, 2021. The purpose of this updated Notice is to inform
SBA employees and Lenders of new SBA Paycheck Protection Platform (platform) procedures
to address (1) Second Draw Paycheck Protection Program (PPP) Loan guaranty applications
where there is a Hold Code on the Borrower’s First Draw PPP Loan, and (2) First Draw PPP
Loan guaranty applications and Second Draw PPP Loan guaranty applications with Compliance
Check Error Messages.
Under the CARES Act, PPP Lenders are deemed to have delegated authority to make and
approve PPP loans without prior SBA review. After issuance of the SBA loan number, all First
Draw PPP Loans made in 2020 were individually screened by an automated tool. The automated
tool compared First Draw PPP Loan data against publicly available information and applied
eligibility and fraud detection rules to identify anomalies and/or attributes that may indicate non-
compliance with eligibility requirements, fraud or abuse. Additionally, after issuance of the SBA
loan number, SBA performed data analytics, including reviewing information from the
Department of Treasury Do Not Pay lists, and other analyses of the 2020 First Draw PPP Loan
portfolio. The automated tool screening, data analysis, and other analyses resulted in the
issuance of Hold Codes on certain 2020 First Draw PPP Loans.
In 2021, before issuance of an SBA loan number, SBA is conducting front-end Compliance
Checks on Lender loan guaranty applications for new First Draw PPP Loans and Second Draw
PPP Loans using a modified version of the automated screening tool and information from the
Department of Treasury Do Not Pay lists. When an issue is identified, the Compliance Checks
generate a Compliance Check Error Message. In many cases, the Hold Codes and the
Compliance Check Error Messages identify the same issues.
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Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
As outlined in the Interim Final Rule for Second Draw PPP Loans, if 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.
See, 86 FR 3712, 3722 (January 14, 2021). The Lender will receive the notification through the
platform and it will include information regarding the Hold Code(s) on the 2020 First Draw PPP
Loan. When a Lender submits a loan guaranty application for a Second Draw PPP Loan where
the 2020 First Draw PPP Loan has a Hold Code(s), the application will be moved automatically
to a research status, and the platform will provide the Lender an opportunity to support the
resolution of the outstanding 2020 First Draw PPP Loan Hold Code(s). Once resolved, these
Second Draw PPP Loan guaranty applications will be automatically submitted into the next stage
of processing and will not require re-entry by the Lender.
Similarly, when the Compliance Check for a 2021 First Draw PPP Loan or a Second Draw PPP
Loan identifies an issue, the Lender will receive a notification through the platform that will
include information regarding the Compliance Check Error Message(s). When a Lender submits
a loan guaranty application for a 2021 First Draw PPP Loan or a Second Draw PPP Loan and a
Compliance Check Error Message(s) is generated, the platform will provide the Lender an
opportunity to support the resolution of the outstanding Compliance Check Error Message(s).
Once resolved, these 2021 First Draw PPP Loan guaranty applications and Second Draw PPP
Loan guaranty applications will be automatically submitted into the next stage of processing and
will not require re-entry by the Lender.
SBA is providing Lenders with the following methods for assisting with the resolution of Hold
Codes and Compliance Check Error Messages:
1. Resolution of Hold Codes and Compliance Check Error Messages through Lender
Certification (Delegated Authority)
If a Lender receives one or more of the Hold Codes or Compliance Check Error Messages
identified in Table 1 below, those Hold Codes and/or Compliance Check Error Messages
may be resolved through a Lender certification process. If the Lender elects to resolve the
Hold Codes and/or Compliance Check Error Messages through the Lender certification
process, the Lender must review Table 1 for the examples of documentation and information
that the Lender must obtain from the borrower in order to resolve the particular Hold Code or
Compliance Check Error Message. If the loan guaranty application generated more than one
Hold Code or Compliance Check Error Message, the Lender must resolve all Hold Codes
and Compliance Check Error Messages before making the Lender certification. If there are
any Hold Codes or Compliance Check Error Messages that require SBA resolution remaining
after the Lender resolves the other Hold Codes or Compliance Check Error Messages, the
Lender may make the Lender certification, but the loan will not be processed until all Hold
Codes and Compliance Check Error Messages are resolved.
After the Lender has obtained, reviewed and retained in its file sufficient documentation to
resolve all outstanding Hold Codes and/or Compliance Check Error Messages from Table 1,
the Lender can go to the platform, where the Lender will be prompted onscreen from within
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SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
the platform to execute the certification. An Authorized Lender Official must complete the
certification. The Authorized Lender Official will be required to certify as follows:
• Lender has obtained from the borrower and/or other sources, and has reviewed,
all information and documentation necessary to resolve the issue(s) underlying
each of the Compliance Check Error Message(s) and Hold Code(s) checked
below:
Compliance Check Error Message #/Hold Code # and Description
□ 501/1 Disqualifying Criminal History Identified/Criminal Record
□ 502/2 Disqualifying Bankruptcy Identified/Bankruptcy
□ 504/4 A Potential Match to Sanctions List Identified/Other Adverse
Information (OFAC)
□ 505/5 Applicant Potentially Deceased/Potential Decedent Application
□ 506/6 Dormant Business Identified/Inactive Business
□ 507/7 Applicant Tax ID Discrepancy/Mismatch of TIN (EIN/SSN)
□ 508/8 Applicant Name Discrepancy/Mismatch of Entity Name
(Individual or Company)
□ 509/9 Disqualifying Business Formation Date Identified/In Operation
after February 15, 2020
□ 516/16 Large Number of Employees at Residential Location/Large
Number of Employees at Residential Business Address
□ 546/46 Do Not Pay – Death Sources
□ 547/47 Do Not Pay – SAM
□ 548/48 Do Not Pay – TOP and CAIVRS
□ 549/49 Do Not Pay – TOP Education
• Except for any Compliance Check Error Messages or Hold Codes that require
SBA resolution, the Lender has resolved all Compliance Check Error Message(s)
and Hold Code(s) generated for this loan guaranty application.
• The Compliance Check Error Message(s) and Hold Code(s) have been resolved
in accordance with Paycheck Protection Program guidance.
• Lender will retain the information and documentation supporting this
certification in its files for the period required by Paycheck Protection Program
document retention requirements. Lender will provide the information and
documentation to SBA when Lender submits a forgiveness decision or guaranty
purchase request, or upon SBA request, so that SBA can review the information
and documentation in connection with a loan or lender review or a guaranty
purchase review.
• Lender acknowledges that SBA is allowing the loan guaranty application to
proceed in reliance upon this certification.
• I am an Authorized Lender Official and I am authorized to issue this certification
on behalf of the Lender.
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SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
Upon submission of the Lender certification, and provided that there are no outstanding Hold
Code(s) or Compliance Check Error Message(s) that require SBA resolution, the platform
will automatically move the loan guaranty application to the next stage of loan processing.
Lenders do not submit any documents to SBA at this time.
If the Lender is unable or unwilling to resolve all of the Compliance Check Error Message(s)
or Hold Code(s), except for those that require SBA resolution, the Lender must withdraw the
loan guaranty application from the platform.
When a Lender resolves Hold Code(s) and/or Compliance Check Error Message(s) through
the Lender certification process, the Lender must submit all information and documentation
supporting the certification to SBA when the Lender submits a forgiveness decision or
guaranty purchase request, whichever occurs first, or upon SBA request. If the Second Draw
PPP Loan Lender is different than the First Draw PPP Loan Lender, and the Second Draw
PPP Loan Lender resolves a Hold Code associated with the First Draw PPP Loan, the First
Draw PPP Loan Lender will still be responsible for resolving the Hold Code at the time of
loan forgiveness on the First Draw PPP Loan. The First Draw PPP Loan Lender may reach
out to the Second Draw PPP Loan Lender or the borrower for information as to how the
Second Draw PPP Loan Lender resolved the Hold Code on the First Draw PPP Loan.1 .
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 loan guaranty
application. OCRM will review the information and documentation that the Lender was
required to obtain, review and retain in support of the Lender certification. And, as part of its
ongoing Lender oversight activities, OCRM will include in its loan file sampling those loans
where the Lender submitted a Lender certification in support of a loan guaranty application
that were not previously reviewed by OCRM as part of the prior random sample to ensure
that appropriate information and documentation exists in the Lender’s file.
2. Resolution of Hold Codes through SBA Review
If the Lender’s Second Draw PPP Loan guaranty application cannot be processed because
there is a Hold Code on the First Draw PPP Loan that is identified in Table 2 below, the
platform will provide the Lender an opportunity to submit information and documentation
into the platform to support the resolution of the outstanding First Draw PPP Loan Hold
Code.
The Lender must resolve the Hold Code by submitting information and documentation
through the platform for SBA review and resolution. Note: The platform reference guide
titled “Unresolved Borrower Resolution Process for Second Draw PPP Loans” lists the Hold
Codes that require SBA resolution and provides guidance as to the types of information and
documentation that may assist with resolution. It is imperative that Lenders respond timely,
1
The Second Draw PPP Loan Lender remains responsible for providing to SBA, upon request,
information and documentation supporting the Lender certification.
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SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
as SBA will need time to review the documentation to determine whether the Hold Code(s)
can be resolved.
If SBA is able to resolve the Hold Code(s), the Second Draw PPP Loan guaranty application
will be automatically submitted into the next stage of processing. If a Hold Code is resolved
by SBA at this stage, the Hold Code will not require further SBA review at loan forgiveness.
If SBA is unable to resolve the Hold Code(s), SBA will not issue a loan number for the
Second Draw PPP Loan.
3. Duplicate Loans and Multiple DUNS Issues
SBA has controls in place to identify duplicate loans. (A borrower may receive only one First
Draw PPP Loan and one Second Draw PPP Loan.) A Second Draw PPP Loan Lender may
be notified of Hold Code 45 on the First Draw PPP Loan, which is identified as “Multiple
DUNS Number.” Similar Compliance Check Error Messages may be generated on First
Draw PPP Loans and Second Draw PPP Loans as follows: (1) “The supplied Tax ID is
potentially already in use on another PPP loan;” or (2) “Only one PPP loan can exist with
DUNS value.” The Lender must work with the borrower to determine whether the borrower
has applied for and/or received a duplicate loan and after working with the borrower, contact
SBA through the platform Inbox using the category: “Duplicate Loans and DUNS issues.”
4. Other Hold Codes Not Covered Above
Some First Draw PPP Loans will have Hold Codes that cannot be resolved by the above
processes. In those cases, the platform will display one of two messages as appropriate: (1)
“Internal SBA Hold – Details Not Publicly Available,” or (2) “Internal SBA Hold that cannot
be cleared at this time – Details Not Publicly Available.” For the “Internal SBA Hold –
Details Not Publicly Available” message, the Lender may contact SBA through the platform
Inbox to receive instructions on steps the Lender may take to assist SBA with resolution of
the issue. For the “Internal SBA Hold that cannot be cleared at this time – Details Not
Publicly Available” message, no further action can be taken by the Lender.
SBA will provide additional instructions in the user guide on the platform.
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SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
TABLE 1: Resolution through Lender Certification (Delegated Authority)
Compliance
Check
Error Hold
Message Code Description
501 1 Disqualifying Criminal History Identified/Criminal Record
502 2 Disqualifying Bankruptcy Identified/Bankruptcy
504 4 Potential Match to Sanctions List Identified/Other Adverse Information (OFAC)
505 5 Applicant Potentially Deceased/Potential Decedent Application
506 6 Dormant Business Identified/Inactive Business
507 7 Applicant Tax ID Discrepancy/Mismatch of TIN (EIN/SSN)
Applicant Name Discrepancy/Mismatch of Entity Name (Individual or
508 8
Company)
Disqualifying Business Formation Date Identified/In Operation After Feb 15,
509 9
2020
Large Number of Employees at Residential Location/Large Number of
516 16
Employees at Residential Business Address
546 46 Do Not Pay - Death Sources
547 47 Do Not Pay – SAM
548 48 Do Not Pay - TOPS and CAIVRS
549 49 Do Not Pay - TOPS Education
Below is a list of the Table 1 Compliance Check Error Messages and Hold Codes, an
explanation of the Compliance Check Error Messages and Hold Codes, and examples of
documentation that can be used to resolve the Compliance Check Error Messages and Hold
Codes. Please note that these are examples only and do not represent a comprehensive list of
documents and information needed to resolve the Compliance Check Error Messages and Hold
Codes. For Hold Codes, if the Second Draw PPP Loan Lender is not the same as the First Draw
PPP Loan Lender, the Lender should also obtain a copy of the SBA Form 2483 (Borrower
Application Form) (or Lender’s equivalent) submitted by the borrower on the First Draw PPP
Loan.
Compliance Check Error Message/Hold Code Explanation and Resolution
Documentation Examples
501/1 Criminal Record identified in public records - Potential
eligibility issue
Lender must obtain 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 obtain information and documentation explaining the
criminal record:
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SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
a. If no criminal record exists:
Obtain 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:
Obtain 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. This statement must show that the
criminal record falls outside of the restrictions in the version of the SBA Form
2483 (Borrower Application Form) (Questions 5 and 6) (or lender’s
equivalent) and/or SBA Form 2483-SD (Second Draw Borrower Application
Form) (Questions 4 and 5) (or lender’s equivalent) submitted by the borrower.
502/2 Bankruptcy identified in public records - Potential eligibility issue
Lender must obtain 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 Second Draw PPP Loan, whichever is applicable, 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. If a Hold Code, loan transcript showing disbursement date for First Draw PPP
Loan
504/4 Potential Match to Sanctions List Identified/Other Adverse Information
(OFAC)
The name of the borrower or one of the owners of the borrower has matched
against the name of an individual or entity on an Office of Foreign Assets
Control (OFAC) sanctions list. (https://home.treasury.gov/policy-issues/office-
of-foreign-assets-control-sanctions-programs-and-information) – Potential
eligibility issue
Lender must document in their file that they have searched all OFAC lists
for the names of the borrower and all owners of the borrower. For any
matches, the Lender must compare the information on the OFAC lists,
including age, address, nationality, gender and any other information
available from the OFAC lists, against the information provided by the
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SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
borrower and/or its owners to determine whether it is a true match or a false
positive.
505/5 Owner or Principal of borrower, as entered in ETRAN or Paycheck
Protection Platform, appears to be deceased in public records
Lender must obtain proof that each owner and principal is not deceased such
as:
a. Identity affidavit
b. Current proof of identity including SSN
506/6 Borrower is no longer active according to Secretary of State filings
or public records - Potential eligibility issue
Lender must obtain 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 or
Second Draw PPP Loan, whichever is applicable, 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
507/7 Tax ID of Borrower or Principal, as entered in ETRAN or Paycheck
Protection Platform, appears to be inaccurate
Lender must obtain 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
508/8 Entity/Individual Name of Borrower or Principals, as entered in ETRAN or
Paycheck Protection Platform, appears to be inaccurate
Lender must obtain 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
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SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
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
509/9 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
Lender must obtain 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.
516/16 Borrower address entered in ETRAN is a Residential Address and Number
of Employees >= 100
Lender must obtain 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 or Paycheck Protection
Platform is not a residential address
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SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
546/46 Owner or Principal of borrower, as entered in ETRAN or Paycheck
Protection Platform, appears to be deceased - Potential eligibility issue
Lender must obtain proof that each owner and principal is not deceased such
as:
a. Identity affidavit
b. Current proof of identity including SSN
547/47 Borrower appears to be on System for Award Management (SAM)
Exclusion list - Potential eligibility issue
Lender must obtain proof that the borrower is not on the System for Award
Management (SAM) Exclusion list such as:
a. Verification of ETRAN or Paycheck Protection Platform accuracy
b. Documents validating business is not debarred
c. Release of debarment
548/48 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
Lender must obtain 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 or Paycheck Protection Platform accuracy
c. Current credit report(s)
d. Proof of resolution
549/49 Borrower listed in Do Not Pay for delinquent federal debt – Potential
eligibility issue
Lender must obtain proof that the borrower is not delinquent on any federal
debt, such as:
a. Verification of ETRAN or Paycheck Protection Platform accuracy
b. Current credit report(s)
c. Proof of resolution
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SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
TABLE 2: Resolution through SBA Review
Hold
Code Description
12 SBA Franchise Directory Review
15 Potential Ineligible Business Size
18 Aggregate Data Mismatch
21 Employee Count Threshold
24 Business Address is Currently Vacant
26 Cannabis – Marijuana/Cannabis Sales
28 Compliance - Debarred Businesses
29 Compliance - Defaulted SBA loan in the last 7 years
30 Compliance - DOL OFCCP Violations
31 NAICS 522 - Credit Intermediation
32 Payday Lender
33 Potential Affiliation Issue
34 Data Anomaly Issue
35 Research Duplicate 9 Digit Tax ID Issue
37 SBA - Potential Affiliation Issue
38 Foreign Country-related entities
39 State or Local Government
40 Eligibility - Lobbying
Questions:
Questions concerning this Notice may be directed to the Lender Relations Specialist in the local
SBA Field Office, which can be found at https://www.sba.gov/tools/local-
assistance/districtoffices.
John A. Miller
Acting Associate Administrator
Office of Capital Access
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Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
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