In this 6-minute read:
- New update as of August 2021: filing an appeal defers loan repayment
- Important information about how to file a PPP loan forgiveness appeal with the SBA / OHA
- Who does the SBA conduct PPP loan reviews for?
- Who can apply for a PPP loan forgiveness appeal?
- How soon do you need to submit your appeal?
- How to file a PPP loan forgiveness appeal
- What happens next?
- Additional PPP loan resources
IMPORTANT UPDATE: As per a new IFR published by the SBA on July 28, 2021, the SBA is extending the loan deferment period for those PPP loans where the borrower has filed a timely appeal of a final SBA loan review decision with the SBA Office of Hearings and Appeals.
With this new IFA, the SBA is amending the appeals rule to, among other things, provide that a borrower’s timely appeal of a final SBA loan review decision will extend the deferment period for the PPP loan until SBA’s Office of Hearings and Appeals (OHA) issues a final decision on the appeal. Under the revised OHA rule borrowers will need to notify their lender of the appeal, so that the lender can extend the deferment period.
Under the revised OHA rule, if you wish to appeal the SBA’s decision on your loan forgiveness, you must file a petition with the OHA within 30 calendar days of the time you received your final SBA loan review decision.
Bottom line: a borrower’s timely appeal of a final SBA loan review decision extends the deferment period on the PPP loan until the SBA’s Office of Hearings and Appeals issues a final decision on the appeal. So, you do not have to start making principal or interest payments on your PPP loan if you have submitted to the OHA an appeal of SBA’s decision within 30 days of receiving notice that SBA did not approve forgiveness of all or part of your loan. Read the full details of the new PPP forgiveness rules, including the SBA PPP Direct Forgiveness Portal.
Not everyone’s PPP loan will be forgiven. If you didn’t spend your funds on authorized expenses or didn’t maintain your workforce and payroll in accordance with the PPP loan requirements (if your loan required it; see below), then you might only get partial loan forgiveness, or none at all. (If your loan is determined to be fraudulent, you will obviously need to pay it back and you may face criminal charges as well.)
After the SBA makes a decision on your loan forgiveness, you may be able to apply for an appeal. Read on to learn who can apply for an appeal, what this means, and how to get this process started.
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Important information about how to file a PPP loan forgiveness appeal
The Small Business Administration (SBA) Office of Hearings and Appeals (OHA) handles all PPP loan appeals. But first, it’s important to know that there are certain circumstances you must meet in order to submit a loan forgiveness appeal with the OHA.
The forgiveness process starts by you submitting your application through your lender, and then they make an initial decision about your loan forgiveness. If they’ve determined that you won’t qualify for loan forgiveness, then they must issue that decision with the SBA and you along with an explanation within 5 business days. Alternatively, they may submit your application to the SBA and then the SBA has up to 90 days to issue a final decision. If your loan isn’t 100% forgiven at that point, then you may be able to submit an appeal.
That being said, you can only submit an appeal if the SBA has issued a loan review decision. So if you wish to appeal, then the SBA must have conducted a review of your PPP loan or you must request an SBA loan review if your lender has decided that you don’t qualify for any forgiveness. In the latter circumstance, however, it is not guaranteed that you will get a review.
Who does the SBA conduct PPP loan reviews for?
The SBA will conduct loan reviews of businesses that took out PPP loans of $2 million or more. And depending on the circumstances, they may issue loan reviews of loans less than $2 million. Generally there are some kind of extenuating circumstances or red flags with your expenditures that cause the SBA to conduct a review. So having a review of your loan isn’t necessarily a good thing. But it is a must if you wish to appeal the final forgiveness decision.
Who can apply for a PPP loan forgiveness appeal?
Once the SBA has conducted a review of your PPP loan and forgiveness application, you can only submit an appeal if your review results in the following determinations by the SBA:
- You weren’t eligible for a PPP loan from the start
- You weren’t eligible for the amount of the PPP loan you received
- You didn’t use the PPP for authorized expenses
- You aren’t eligible for the PPP loan amount your lender decided
- Your lender issued a full denial decision to the SBA (meaning you aren’t eligible for any PPP loan forgiveness)
If the SBA determines that your PPP loan isn’t eligible for forgiveness for any of these reasons after reviewing your loan, then you may appeal their decision.
Note: Submitting an appeal doesn’t not guarantee that you will get loan forgiveness. It just gives you an additional opportunity for the SBA to check over everything again (should they choose to accept your appeal) and re-determine your eligibility for loan forgiveness.
How soon do you need to submit your SBA PPP loan forgiveness appeal?
If you wish to file an appeal, you must submit it to the OHA within 30 days of receiving your final SBA decision or notification from your lender (whichever comes first).
How to file a PPP loan forgiveness appeal with the SBA
The PPP loan forgiveness appeal process is not one to be taken lightly. You may even consider having your attorney help you put everything together. You’ll need plenty of documentation to verify your claims and your appeal should also include a number of statements as indicated below.
Your appeal should include the following:
- The basis for OHA’s jurisdiction and proof that you are filing your appeal on time
- A copy or description of the SBA loan review decision that you are appealing
- An explanation of why you think the SBA’s decision is wrong
- What you hope to achieve—how much loan forgiveness you think you should be getting
- Signed copies of your payroll tax filings reporting to the IRS, unemployment insurance tax filings, and state quarterly employee wage reporting copies OR an explanation for why you don’t have these
- Signed copies of federal tax returns and the necessary schedules filed with the IRS that show your self-employment or partner income OR an explanation for why you don’t have these
- Your and/or your attorney’s name, address, phone number, email address, and signature
Once you have all of that ready and any necessary documentation included, you can send it to the SBA with the following contact information:
Associate General Counsel for Litigation, U.S. Small Business Administration
409 Third Street SW
Washington, DC 20416
Email address: OLITService@sba.gov
What happens after you submit your PPP forgiveness appeal?
After the appeal documentation is received, the OHA will assign it to an Administrative Law Judge who will then determine if the appeal should be dismissed or looked into further. Should the appeal move forward in the process, the judge will establish a deadline for the appeal process.
Generally, this will involve having the SBA produce an administrative record of the appeal within 20 days of the judge’s issuance of an order and then the record will close 45 days after the OHA receives the appeal. The administrative record should consist of the documents that the SBA used to make its final decision on the loan forgiveness. After that record is produced, the person/business who submitted the appeal will have the chance to object to the record if they feel there is anything missing that should be included in this decision.
The judge should make their decision within 45 days of the close of the record, and then the decision will become final after another 30 days (unless a request for a review is filed).
From that decision it may be determined that your loan can be fully forgiven, in which case you won’t have to pay it back. But the more likely scenario is that your loan may be partially forgiven or not forgiven at all, resulting in you having to pay the loan back.
Previous to August 2021, this appeals process did not defer deadlines for loan repayment and the loan repayment terms will remain the same. However, a new IFR on July 28, 2021 established a rule that extends your loan deferment if you file an appeal in a timely manner, and you will not have to make principal or interest payments until the SBA makes an official decision on your appeal. Read the full details of the new PPP forgiveness rules.
Additional PPP loan resources
- Which PPP forgiveness application should I use? Breakdown of Form 3508, 3508EZ, & 3508S
- What happens if my PPP loan is not forgiven? Repayment terms and next steps
- Do PPP loans affect business taxes and deductions?
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