Not Approved for a PPP Loan Forgiveness? Here’s What to Do
Ezra Cabrera | November 8, 2021
Key Takeaways
- PPP loans can be forgiven, turning your loan into grant money. In other words, you won’t have to repay the PPP loan if you qualify for forgiveness.
- If your application was denied, you can appeal the decision.
- The appeal process involves requesting a review from the SBA and submitting the necessary documents to the Associate General Counsel for Litigation, U.S. Small Business Administration.
One of the notable perks of the Paycheck Protection Program (PPP) is that PPP loans can be forgiven, turning your loan into grant money. However, not everyone is eligible for forgiveness. People who didn’t spend their funds on approved expenses or did not maintain the PPP loan’s workforce and payroll requirement may only qualify for partial forgiveness (or none at all).
The U.S. Small Business Administration (SBA) and the Treasury Department issued a rule that businesses denied forgiveness could appeal the decision. This process involves legal processes and procedures, and you’ll need to consult with a lawyer.
Read on to know more about PPP loan forgiveness appeals – who is eligible to file, how you can do it, and where to send it.
What is a PPP Loan Appeal?
A PPP loan forgiveness appeal allows borrowers to dispute the SBA’s loan review result. There are three possible outcomes for every appeal: reversing, affirming, or remanding the original decision.
The Basics of a PPP Loan Appeal
If the SBA determines that you do not qualify for PPP loan forgiveness, you can appeal the decision and start the process with the Office of Hearings and Appeals (OHA).
When applying for loan forgiveness, your lender decides how much is forgivable to you and the SBA.
Here’s what you need to remember: you can only submit an appeal with the OHA is if the SBA issued a loan review decision. You CANNOT apply for an appeal with the OHA based on your lender’s decision.
2 Ways You Can Get an SBA Loan Review Decision
- The SBA itself chooses to conduct a review of your PPP loan application.
The SBA reviews all PPP loans that are $2 million or more. They may also selectively review loans that are less than $2 million depending on the circumstances. Generally, the SBA does this when they find red flags with regards to how you’ve spent the money.
- Request a review.
If your lender denies your PPP loan forgiveness application, they should inform you and the SBA of their decision with an explanation within five business days. Lenders may also submit your application to the SBA, and the SBA has 90 days to make a decision. If you didn’t qualify for forgiveness, you could then submit a request to the SBA asking them to review the decision. However, keep in mind that a review isn’t guaranteed even if you submitted a request.
You can appeal the decision to the OHA after the SBA reviews your loan and denies forgiveness.
Who Can Appeal the PPP Loan Forgiveness Decision?
Before you appeal the decision, make sure you are eligible to do so. You can request an appeal if the SBA determines that:
- You were denied a PPP loan
- You are not eligible for the loan amount the lender approved you for
- You used the funds from a PPP loan for unauthorized purposes
- You did not qualify for forgiveness when the lender submitted a full denial decision to the SBA
Your SBA loan review contains information on your right to appeal, given that the SBA’s decision is appealable.
The PPP Loan Appeal Process
The first thing you need to do is to gather the necessary documents the OHA needs. It’s best to hire a small business attorney to help you organize the paperwork and guide you through the entire process.
Here are some of the things you need for your appeal petition:
- A copy of the review decision you’re appealing or a document describing the decision.
- The basis for OHA’s jurisdiction (with proof that you’re filing on time).
- A report outlining why the loan review decision is incorrect.
- Your desired outcome of the appeal (for example, the forgiveness amount you prefer).
- Signed copies of all payroll tax filings reported to the IRS or an explanation as to why this information is irrelevant or unavailable.
- Signed copies of tax returns and schedules submitted to the IRS or an explanation was to hy this information is irrelevant or unavailable.
- Signed copies of state quarterly business and individual wage reports of unemployment task filings or an explanation as to why this information is irrelevant or unavailable.
- Yours or your attorney’s contact information (name, phone number, email) and signature.
Send Your Appeal Here:
Once you’ve gathered all the information needed, send your appeal petition and supporting documents along with a signed certificate of service to:
Associate General Counsel for Litigation, U.S. Small Business Administration
409 Third Street SW
Washington, DC 20416
The SBA’s email address for appeals is: OLITService@sba.gov
Remember: Submitting an appeal does not guarantee loan forgiveness. The SBA will recheck your application, giving you another chance for forgiveness.
The Deadline for Appeal Submissions
Submit your appeal within 30 calendar days after receiving the final SBA loan review decision or a notification from your lender regarding the SBA loan review decision (whichever is earlier).
What are Possible Appeal Outcomes?
After submitting your appeal to the OHA, they will assign the case to a judge. The judge should issue their initial decision within 45 calendar days after the OHA received the appeal.
You can file a request for reconsideration or review the judge’s initial decision within 10 calendar days. The judge has 20 calendar days to reconsider the decision.
If you will not file for reconsideration, the judge’s initial decision automatically becomes the SBA’s final decision after 30 calendar days.
There are three possible outcomes:
- Affirms the decision
- Reverses the decision
- Remands the decision
The Bottom Line: Preparedness is Necessary
Appealing your PPP loan forgiveness application is a lengthy procedure, and it can be overwhelming to go through everything alone. Be sure to consult with a reputable small business attorney to help you navigate the appealing process.
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