Your PPP Lender Refused to Fund Your SBA-Approved PPP Loan – Now What?

Challenges with the Paycheck Protection Program

It does not take much effort online to see there is a massive, lingering problem with the Paycheck Protection Program – PPP lenders across the country refused to fund thousands of borrowers’ PPP loans even though the loans were SBA approved and the borrowers had signed and submitted all required PPP loan documents.

It seems the group of PPP borrowers most impacted by unfunded loans were sole proprietors and the smallest of small businesses seeking loans smaller than $50,000.

In early 2021, the loan processing fees for small PPP loans were increased substantially such that lenders could receive $2,500 flat fees for each loan compared with their having only received a few hundred dollars for previous similar loans. The result was a predictable disaster – PPP lenders and loan servicers were overwhelmed by PPP loan applications. In the chaos of the last few months of the Program, it appears likely that lenders violated many PPP rules and breached their contracts with PPP borrowers.

Lenders most commonly:

  1. Failed to timely process PPP loan applications;
  2. Prevented PPP loan applicants from applying with other PPP lenders;
  3. Was unable to communicate and work with borrowers to resolve issues;
  4. Refused to fund SBA approved PPP loans;
  5. Requested the same or additional documents from borrowers long after they had already signed their loan documents;
  6. “Denied” PPP loans after approving them, and after borrowers had already signed and submitted their PPP loan documents, including their promissory notes; and
  7. Reported unfunded loans as fully disbursed, resulting in payment of the loan processing fees.

In many instances, it appears the lenders looked for or even created excuses or reasons to get out of funding PPP loans because the lenders did not have the means to timely process and fund the loans.

Nolan Heller Kauffman files class-action cases

While it is undeniable that PPP loan demand was high in 2021, that does not excuse PPP lenders’ conduct or relieve lenders of their contractual obligations to their PPP borrowers. It was solely the responsibility of PPP lenders to process and fund PPP loans within the time frames set by the PPP and SBA rules.

We have filed two class-action cases on behalf of putative classes of individuals and small businesses whose loans were never funded despite SBA records showing that they were. If you find yourself in a similar situation, you can contact us at the number below.

What can you do?

If you believe your PPP lender did not properly process your PPP loan or loan application for any of the above reasons, you may have a right to sue your PPP lender for the damage caused to you and your business as a result. This is particularly true if you timely applied for a PPP loan, it was SBA approved, you signed the loan documents, and you never received your PPP loan funds for one reason or another.

Contact Us

If you have questions or concerns regarding an unfunded Paycheck Protection Program loan or how to navigate a dispute with your PPP lender regarding your PPP loan, please get in touch with Matthew M. Zapala, Esq., by e-mail ( or phone (518.432.3133) for a no-cost consultation to see how Nolan Heller Kauffman LLP may be able to assist you.

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