UPDATE 5/1 11:00AM EST -- SBA confirms loans applied for prior to the refunding are still being processed, and advance may just show up in your bank account with no notification.

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Most small businesses have been left in the dark regarding emergency support from the Small Business Administration (SBA) as millions upon millions of small business entities look for funding from the federal government during the Chinese coronavirus pandemic.

The SBA likes to say they 'processed more loan applications during 14 days as they had during the last fourteen years', when speaking of the first two weeks of Emergency Injury Disaster Loan (EIDlL) and Paycheck Protection Program (PPP) passed by Congress in the CARES act. However, that doesn't mean much if your business is dying due to a demand shock and you've received nothing to help after the government forced your business to close through no fault of your own.

Many EIDL applicants have had no communication from the SBA and no funds deposited after completing their application weeks ago. There is much confusion as to the so-called '$10k advance'.

The PPP has been notoriously corrupted by big banks and special interests leaving many mom and pop shops with nothing as their life's work disappears overnight.

We at CDMedia pushed for answers from the SBA and from Congress and here is what we found.

Regarding the EIDL, funding ran out in mid April; however, the SBA looks to have the program back online early next week, according to SBA Press Director Carol Wilkerson in Washington, D.C.

Regarding the EIDL advance.  It is calculated at $1,000 per employee (up to $10k)

1. The amount for the EIDL advance is calculated at $1,000 per employee.   

We could not get information as to any other requirements for the advance being paid out as the results seem rather random as to who gets it and when. We were told that a 'loan officer' is reviewing every application. A source within the Federal government told us, "The SBA has had trouble handling the volume of loan requests during normal disasters. The demand placed on them now is off the charts."

The SBA has now forced large numbers of applications for the PPP to be 'batched' by lenders to cut down on server demand. SBA is also blocking out processing time for small banks to 'ensure mom and pop companies and small lenders are taken care of'. There was a 10 day backlog of applications when the PPP program restarted on Monday of this week following new funding being approved by Congress, according to a government source.

Senator Rubio is the Chairman of the Senate Appropriations Committee and has sent several letters to big banks requesting information on 'filters' used during the initial PPP loan approval process. In short, rumors of favoritism over small businesses for 'preferred customers' sparked this inquiry. Evidence of large companies getting many millions in loans as small business suffered have been all over the headlines.

Per Rubio press release:

However, since the program began accepting applications and issuing approvals on Friday, April 3, 2020, I, as well as other members of the Senate, have received reports of priority being given to certain applicants over others. While I recognize the challenges of setting up a program of this size, processes to handle applications, and appropriate guidance to administer the program, it is important for small businesses and nonprofits of various sizes, regional locations, and missions to have equal access to PPP assistance. To ensure a neutral distribution of assistance, I request that you provide the Committee with answers to the following questions: 

1. Did your financial institution set up an application process for PPP that is based on a first-come, first-serve basis from within the pool of eligible applicants? If not, please describe why not.
2. Did your financial institution include any filters in its application process that would prioritize certain borrowers over others? If so, please describe the factors for which those filters select.
3. What practices and processes does your financial institution have in place to ensure neutral access to PPP loans for small business borrowers across relevant size, regional, and ownership categories? 

In addition, Rubio sent a letter to the Canadian bank CIBC, for information the bank was checking a loan applicant's 'environmental policy' and if they conducted any business with the U.S. Department of Defense before giving loan approval.

“It has come to my attention that CIBC USA may have an internal policy of examining PPP borrower applications based on its ‘Reputation and Legal Risk Policy,’ which reviews prospective borrowers’ environmental policies and determines whether they engage in business with the U.S. Department of Defense,” Chairman Rubio wrote. “I find these reports concerning as such a policy would be in blatant contravention of statutory language, congressional intent, and regulations for a critical program funded with U.S. taxpayer dollars.” 

Finally, CDMedia has been contacted by tax professionals concerned about the arbitrary addition into the PPP loan application standards the issue of 'additional sources of liquidity.'

From the Frequently Asked Questions on the PPP, the SBA wrote:

Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business. For example, it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification.

One CPA told us, "Congress specifically barred lenders from using credit information when making these loans. Now adding this language is making it hard on certain businesses that have been harmed by the shutdown. Many may have to return the money and lay off employees."

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