The Paycheck Protection Program, a component of Congress’ response to the COVID-19 pandemic, was a boon to many small businesses. But the program unfolded so fast the rules and regulations governing it had to catch up later.
Issues as fundamental as eligibility and loan forgiveness issues were, at times, less then clear. Now that the dust has settled, SBA will be very busy reviewing loan files to determine whether applicants were eligible in the first place and whether they used the funds in ways that qualify for forgiveness. It’s a certainty that the SBA may make decisions that some loan recipients don’t like.
Thanks to a new rule, unfavorable decisions don’t necessarily have to spell disaster for already distressed businesses (e.g., SBA determines a large portion of a small business’ million dollar loan isn’t eligible for forgiveness). Why? SBA recently created a process to challenge those decisions through its internal Office of Hearings and Appeals. If you think that SBA decided something wrong, you can ask an administrative judge to review the decision. In other words, you can now subject these initial determinations to a rigorous legal review before they become final.
So what decisions can a small business appeal? Borrowers can appeal final written decisions, issued by SBA after it completes a review of a PPP loan, that find a borrower: (1) was ineligible for a PPP loan; (2) was ineligible for the PPP loan amount received or used the PPP loan proceeds for unauthorized uses; (3) is ineligible for PPP loan forgiveness in the amount determined by the lender in its full approval or partial approval decision issued to the SBA; or (4) is ineligible for PPP loan forgiveness in any amount when the lender has issued a full denial decision to SBA.
If your business finds itself on the adverse end of an SBA PPP decision, give us a call at 913-354-2630 to discuss an appeal.