Fraud Checks and Errors Gradual Small-Enterprise Reduction Loans

That caused – or revealed – a cascade of problems. Formatting applications in a way that passes the agency’s auto-verification has been a challenge for some lenders, and many have had to overhaul their technology systems almost daily to keep up with the agency’s system adjustments. False red flags, which can require time-consuming human intervention to correct, remain an ongoing problem.

Numerated, a technology company that processes loans for more than 100 lenders, is still growling around 10 percent of its requests in error codes, up from a high of more than 25 percent, said Dan O’Malley, the company’s chief executive officer.

The problems can be even more complicated for applicants looking for secondary loans who have gone through the process for the first time, despite errors that are only now being discovered.

Almost 5 percent of the 5.2 million loans granted last year had “anomalies,” the agency announced last month. These ranged from small errors such as typing errors to large errors such as inadmissibility. Even tiny mistakes can lead to bureaucratic disasters.

In June, Shelly Ross received a $ 67,500 loan through PayPal for Tales of the Kitty, their San Francisco cat-care company. She applied for a second loan last month, but her application was stuck in an error queue for more than a week. Her attempts to reach someone on PayPal’s congested customer service phone line went nowhere.

Impatiently, Ms. Ross applied to three other lenders, but each was turned down or left pending. Eventually, PayPal got in touch with her with a statement: Her loan was made in June under a fake employer ID. The company fixed the bug, and Ms. Ross assumed her loan was imminent – until a new problem arises.

Before Ms. Ross took out the PayPal loan in June, she had accepted and returned a loan that had been made by another lender in April. This loan is still showing as active in the Small Business Administration system so it looks like it double dipped last year which is prohibited.

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