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The problems plaguing those seeking loans from the government’s revived small-business relief program have ranged from simple to shocking.
Some applications were stalled for weeks by typos. Overzealous fraud filters trapped others. A change of taxpayer identification rules snarled many freelancers and sole proprietors. And then there were the thousands of people turned down because they erroneously registered as having a recent criminal conviction.
“It’s been a nightmare,” said Martha Theirl, who spent hours battling three levels of customer service support at her bank in her attempt to get a loan for her physical therapy business.
Six weeks into the second run of the Paycheck Protection Program, $134 billion in emergency aid has been distributed by banks, which make the government-backed loans, to 1.8 million small businesses. But a thicket of errors and technology glitches has slowed the relief effort and vexed borrowers and lenders alike.
Applications for pandemic aid are being rejected at a high rate, leaving small businesses in the lurch
Both state and federal programs are rejecting higher numbers of applicants as officials rush to fix paperwork issues.
By Shirley Leung and Janelle Nanos Globe Columnist and Globe Staff,Updated February 10, 2021, 6:27 p.m.
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Doug Bacon applied for the state grants in October, but so far has received funds to support just one of his eight restaurants.Suzanne Kreiter/Globe staff
Thousands of hard-hit small businesses are once again having trouble accessing millions of dollars in pandemic aid from the state and federal governments, as they fight for survival while a second wave of virus infections continues to undermine the economy.
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By most accounts, this latest round of the Paycheck Protection Program has been a much smoother process. In the course of the now $284.5 billion relief program, the Small Business Administration has already approved more than 400,580 forgivable loans for approximately $35 billion. Yet some lenders say not all eligible borrowers have been getting the assistance they need. Worse, they re getting immediate rejections.
On a phone call with lenders on Tuesday, the SBA offered new remedies for handling such rejections, which have triggered holds on borrowers second-draw PPP loan applications and thus delayed vital funding for struggling businesses. The SBA estimates that about 4.7 percent of lender-submitted data from the prior rounds of PPP was found to contain anomalies described by the SBA as mostly data mismatches and eligibility concerns.
The U.S. government is pressuring large lenders to go live this week with another round of a key federal pandemic loan program despite many unresolved issues, sparking an industry scramble to get lending platforms ready, five people familiar with the discussions said.