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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

SBA Procedural Notice

TO: All SBA Employees and Paycheck 

Protection Program Lenders

SUBJECT: Second Notice of Revised Procedures 

for Addressing Hold Codes and Compliance Check 

Error Messages on PPP Loans

CONTROL NO.: 5000-808216

EFFECTIVE: March 29, 2021

This Notice revises the guidance provided in SBA Procedural Notice 5000-20092, “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” (First Revised Hold Code Notice). The purpose of this Notice (the Second Notice) is to

inform SBA employees and Lenders of updated 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. Except as revised by this Second Notice, all other provisions 

of the First Revised Hold Code Notice remain in effect.

A. Interim Final Rule (86 FR 13149) Updates:

1. Disqualifying Criminal History Identified – Compliance Check Error Message #501

As outlined in the Interim Final Rule (IFR) on Revisions to Loan Amount Calculation and 

Eligibility (86 FR 13149), for loans approved on or after March 4, 2021, SBA has removed the 

eligibility restriction that prevents businesses with owners who have non-financial fraud felony 

convictions within the last year from obtaining PPP loans, provided that the owner is not 

presently incarcerated. 

Going forward, SBA will remove Compliance Check Error Message #501 on a loan guaranty 

application, when SBA has identified that the reason for the Compliance Check Error Message is 

for non-financial fraud felony convictions, provided that the owner is not presently incarcerated. 

This change does not apply to Hold Code #1 (Criminal Record) because the eligibility change in 

the IFR is not retroactive.
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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

2. Delinquent or Defaulted Federal Student Loan (Do Not Pay – TOP Education) –

Compliance Check Error Message #549/Hold Code #49

In the same IFR, SBA removed the eligibility restriction that prevents businesses with owners 

who are delinquent or in default on their Federal student loans from obtaining PPP loans.

Because this change is retroactive, SBA will remove Hold Code #49 and Compliance Check 

Error Message #549 for all applications and loans with no action required by the Lender.

For both A.1. and 2. above, if the only Hold Code or Compliance Check Error Message on the 

loan or loan guaranty application is #501 or #549/#49, the Lender will know that the Hold Code 

or Compliance Check Error Message has been removed when SBA issues a loan number for the 

First Draw PPP or Second Draw PPP Loan. Otherwise, the Lender will need to resolve any 

remaining Hold Code(s) or Compliance Check Error Message(s) in accordance with the First 

Revised Hold Code Notice, as revised by this Second Notice, before SBA will issue a loan 

number.

B. Refinements to Automated Screening

Using an analysis of historical data from previous manually-dispositioned loans with Hold 

Codes, SBA has obtained a validated machine learning scoring model that allows automated 

dispositioning of First Draw PPP Loans with Hold Codes that are at a minimal risk of 

noncompliance with eligibility requirements, fraud, or abuse. SBA intends to deploy this model, 

and expects that application of this model will result in a significantly reduced number of First 

Draw PPP Loans with Hold Codes. 

In the interim, Lenders should continue resolving Hold Codes on First Draw PPP Loans in 

accordance with the First Revised Hold Code Notice, as revised by this Second Notice. If all 

Hold Codes on a First Draw PPP Loan are resolved in accordance with the First Revised Hold 

Code Notice, as revised by this Second Notice, SBA will issue a loan number on the Second 

Draw PPP Loan, regardless of whether the model has dispositioned the First Draw PPP Loan. 

SBA is currently testing the model on a sample of 2021 First Draw PPP Loan and Second Draw 

PPP Loan applications and, once completed and validated, will begin applying the model to 

resolve Compliance Check Error Messages on new and existing 2021 applications. Lenders will 

know the model has been deployed to resolve a Compliance Check Error Message if SBA issues 

a loan number, but in the interim, Lenders should continue to resolve Compliance Check Error 

Messages in accordance with the First Revised Hold Code Notice, as revised by this Second 

Notice.

C. Updated Lender Certification

To encourage Lenders to continue to use the Lender Certification process to resolve Hold Codes 

and Compliance Check Error Messages on Table 1 of the First Revised Hold Code Notice, SBA 

is updating the Lender Certification process.

SBA is allowing Lenders to resolve Hold Codes and Compliance Check Error Messages by 

obtaining a written borrower certification along with supporting documentation of the type 

identified for each Hold Code or Compliance Check Error Message in the First Revised Hold 

Code Notice. Consistent with the borrower’s application for a First Draw PPP Loan or a Second 
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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

Draw PPP Loan, the borrower’s written certification must be signed under penalty of perjury and 

must attest to the accuracy of the certification and supporting documentation. After the Lender 

has obtained the borrower’s written certification and supporting documentation to resolve all 

outstanding Hold Codes and/or Compliance Check Error Messages from Table 1 of the First 

Revised Hold Code Notice, the Lender may execute the updated certification within the 

Platform. The Lender must retain the borrower’s written certification and supporting 

documentation in its file and must provide them to SBA as indicated in the Lender Certification.

Consistent with the First Revised Hold Code Notice, Lenders may not resolve any Hold Codes 

that require SBA resolution (Table 2 of the First Revised Hold Code Notice). 

In the Platform, the updated Lender Certification will appear as shown below.

An Authorized Lender Official must complete the certification and will be required to certify as 

follows:

• Lender has obtained a written borrower certification and supporting documentation as 

set forth in SBA Procedural Notice 5000-20092, as revised by SBA Procedural 

Notice 5000-808216, with respect to the issue(s) underlying each of the Compliance 

Check Error Message(s) and Hold Code(s) checked below. The Lender is relying on 

the borrower’s written certification and supporting documentation to resolve the Hold 

Codes and/or Compliance Check Error Messages.

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

• Lender will retain the borrower’s written certification and supporting documentation 

relied upon in making this certification in its files for the period required by Paycheck 

Protection Program document retention requirements.

• Lender will provide the borrower’s written certification and supporting

documentation to SBA upon request.

• 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

Consistent with the First Revised Hold Code Notice, 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. SBA is allowing the loan guaranty 

application to proceed in reliance upon the Lender’s certification. Upon SBA’s request, the 

Lender must submit the borrower’s written certification and supporting documentation. Failure 

by a Lender to do so may result in denial of loan forgiveness (in whole or in part), denial of the 

guaranty (in whole or in part), or other remedies available under applicable law or regulation. 

SBA strongly encourages Lenders to work with their applicants and borrowers to resolve Hold 

Codes and Compliance Check Error Messages as delegated lenders. Lenders can withdraw a loan 

guaranty application from the Platform in order to enable the applicant or borrower to pursue 

other options. SBA appreciates all the Lenders and their commitment to executing this program

and facilitating much needed economic relief to small businesses and nonprofit organizations 

nationwide. 

Questions

Questions concerning this Notice may be directed to the Lender Relations Specialist in the local 

SBA Field Office.

Patrick Kelley

Associate Administrator

Office of Capital Access